1. New Zealand GDP
2. Swiss Producer & Import Prices
3. US Durable Goods Orders
New Zealand Gross Domestic Product (QoQ) (1Q) (22:45 GMT; 18:45 EST)
Consensus: 0.7%
Previous: -0.1%
Outlook: New Zealands economy is expected to have expanded 0.7% over the first quarter of the year after having contracted over the final three of the last year. Likely buoying growth for the period was construction given the strength in both residential and non-residential building. However, recent falls in building consents suggest that the latest spurt may be short lived. The service sector is likely to bolster stronger growth as well, aided by a rebound in wholesaling and retailing. This recovery may be short lived as well, though, as recent retail sales data, household spending indicators, and consumer confidence, have slipped. Reserve Bank of New Zealand Governor Alan Bollard has raised the benchmark interest rates nine times since January 2004 to a record 7.25%, and despite slowdowns in previous quarters, first quarter growth may leave Bollard with no immediate economic justification to cut borrowing costs.
Previous: In the final months of 2005, New Zealand's economy contracted for the first time in more than five years, by 0.1%. Manufacturing declined for the fourth straight quarter by 0.9%, led by the chemical industry after the closure of a major methanol plant. Exports, which make up 30% of the economy, saw marginal gains, as export volumes of goods and services increased 1.6%, headed up by dairy shipments. Spending by tourists, which is treated as an export, fell 12%, and also impacted spending on transport, hotels, and restaurants. Sales of durable items fell 1.4%, as consumer confidence dropped to a five-year low.
Swiss Producer & Import Prices (MAY) (07:15 GMT; 03:15 EST)
(MoM) (YoY)
Consensus: 0.2% 2.4%
Previous: 0.8% 1.9%
Outlook: : As energy prices moderated somewhat in May from Aprils record highs, producer and import prices are expected to respond by rising 0.2% in May. In related inflationary news, the consumer prices measure accelerated 0.2% over the same month, pushing the yearly reading to 1.4%. This puts the annual figure well below the Swiss target of 2%, possibly allowing the Swiss National Bank room to wait on hiking rates even further. However this has not factored into policy decision in the past, while central bank officials have instead cast their attention to rampant economic growth. The SNB is therefore likely to consider robust 0.9% GDP growth over the first quarter, or a 3.5% annual pace, when meeting in September.
Previous: Swiss producer and import prices rose 0.8% in April, the most in 13 years, as surging oil costs pushed up the price of energy. Expectations were set at 0.3% for the month. The 49% surge in the cost of oil in the past year squeezed profit margins and raised fears over inflation beyond what Swiss wages could tolerate. Although the increases had not been evident in consumer prices, these concerns may have been a major motive in the Swiss central bank rate hike at their last meeting in June.
US Durable Goods Orders (MAY) (12:30 GMT; 08:30 EST)
(Headline) (Ex Transport)
Consensus: 0.7% 0.6%
Previous: -4.4% -1.1%
Outlook: Orders for durable goods are likely to have risen in May by 0.7% following the hefty 4.4% drop in April. Companies, encouraged by rising profits, have been purchasing new equipment, such as computers and machinery, to improve efficiency and help push back capacity restraints and make up for fuel costs that remain near record highs. Manufacturing has been a strong sector recently, especially companies producing goods for the energy, semiconductor, and aerospace industries. Projections for the rest of the year are positive, as GDP is anticipated to grow by about 3% this year.
Previous: Orders for durable goods dropped 4.4% in April, after a 6.6% gain in March that was the biggest in 10 months, as demand for aircraft, computers, and defense hardware slowed, raising concerns that companies plan to curb spending. Excluding transportation, the most volatile volatile component, orders unexpectedly fell 1.1% in April. Companies may be less willing to maintain the pace of investment as rising fuel prices increase their costs and erode consumer sentiment.
