DailyFX Economic Release Alerts 12-05-2005 - 1. Australian Trade Balance 2. Japanese Household Spending 3. UK Manufacturing Production 4. Bank of...

... Canada Rate Decision 5. Reserve Bank of Australia Rate Decision

Australian Trade Balance (OCT) (00:30 GMT; 19:30 EST)
Consensus: -1450M
Previous: -1615M

Outlook: Australia's trade deficit is expected to contract to A$1.45
billion in October, to bring the balance to its highest level in six
months as demand for imports waned as prices for exports of necessary
metals continued to rise. While the economy has been hit by falling
consumer spending over the past months as unemployment picked up off of
record lows and the cost of living remained high; the same reduction is
likely to translate in similar reductions in purchases of foreign goods.
Consequently, ever increasing prices of raw materials produced by
Australian companies could provide the push the balance needs.
Providing sterling examples for Australian exports are gold and copper.
Both commodities maintained their steady price increases in October as
demand from manufacturers abroad subsequently picked back up as
companies had to direct less of their revenues to costs of crude oil and
other energy products.

Previous: Trade between Australia and the rest of the world reported
its 44th consecutive deficit in September as exports of metals and
perishable agricultural goods decline while imports for business
equipment picked up. Australian goods sold abroad fell to A$14.67
billion for the period paced by a 1 percent decline in meat, wool and
other farm goods. Sales of necessary metals also dipped slightly for
the period, despite rising prices, as business managers cut back on
orders in the face of higher costs for energy products and other raw
materials. Subsequently, total imports for the month rose to A$16.28
billion led by imports of capital goods rose 3 percent. The central
bank was confident in the countries sustained economic growth for the
coming quarters dependant on both business investment as well as exports
in the face of dropping consumer spending. With business investment
ramping up as the RBA expected, the increase in demand has been met with
rising prices for capital goods to further depress the trade balance and
detract from growth. Australia's economy grew 1.3 percent in the
second quarter, the fastest pace in a year and a half, but the sustained
deficit will likely slow this pace unless exports or consumer spending
perk up.


Japanese Overall Household Spending (YoY) (OCT) (05:00GMT; 00:00 EST)
Consensus: 1.8%
Previous: 1.0%

Outlook: Overall household spending is expected to increase 1.8
percent on an annual basis in October for the first two periods of
subsequent increases in the indicator in over a year. Supporting the
forecasted increase in spending is the previously released 1.3 percent
year-over-year increase in spending by households headed by a salaried
worker. Japanese consumers were more liberal with their money in
October, despite a large jump in the jobless rate for the same period,
as wages buoyed confidence. Wages rose 0.5 percent in October from the
same month a year, following a 0.8 increase from the previous period.
Wages have steadily increased through the year following structural
reorganizations and lay offs that has freed up significant amounts of
revenue. Unexpectedly, the strengthening labor market is also believed
to be the reason for the larger than normal increase in the October
unemployment rate. Those that had formerly left the job market while
companies were on a hard-line system of layoffs are starting to comeback
in droves with hiring back on managers lips. If spending continues to
rise consistently over the coming months, inline with employment, then
inflation and subsequently rate hikes could be close behind.

Previous: Household spending in the world's second largest economy
rose 1.0 percent in September, the first increase in eight months. The
increase contradicted the decline forecasted on the basis of the drop in
spending by households headed by a wage earner for the same period. The
more specific indicator, which accounts for nearly 60 percent of overall
spending, reported a 0.6 percent decline. Explanations for the
unexpected increase were placed on improved sales following the
sustained deflation that has made products relatively cheap as well as a
developing improvement to the job market.


UK Manufacturing Production (MoM) (OCT) (09:30GMT, 04:30 EST)
Consensus: 0.2%
Previous: -0.3%

Outlook: Manufacturing activity in the UK is expected to rise 0.2
percent in October for the first monthly increase in three. The sector
accounts for nearly 15 percent of the economy and remains one of the
last lines of support for an economy that is struggling with soft
consumer spending and stalling economic growth. Business confidence has
been on the rebound over October and November as input prices of energy
products ease and consume less of producers' already slim bottom
lines. The actual results for production for the period therefore rely
on consumer demand. Consumer demand continued actually rose for the
third consecutive month in October with a moderate 0.2 percent increase;
this despite confidence hitting a two and a half year low for the same
period. Slowing aggregate growth, led by a decline in domestic
spending, was the reasoning behind the Bank of England's decision to
lower the overnight lending rate. If consumer spending and
manufacturing cannot find their way back into steady, positive
territory; the central bank may be inclined to focus more solely on GDP
and less on inflation which is ticking lower and once again cut the
benchmark interest rate.

Previous: Factory production shrank for the second month in a row in
September as manufacturers struggled with high oil costs while the
economy strained to avoid a contraction. Crude oil rose an astounding
38 percent since the beginning of the year, with petrol prices closely
tailing the rise. The increased cost for the necessary good led to a
reduction in new orders as well as exports for companies as revealed by
the Confederation of British Industry's indices of both of the
measures. The CBI gauge of exports fell to -25 in September while the
measure for new orders checked in at -7. Weakness has also found its
base in weakening domestic consumer spending for producers' goods.
UK retail sales fell for a six month in September by 0.8 percent
according to the survey conducted by the BRC. Manufacturing's poor
report for the period was mainly dragged lower by a 1.6 percent decline
for chemicals and man-made fibers and a 0.6 percent drop in food, drink
and tobacco.

Bank of Canada Rate Decision (DEC)(14:00 GMT, 9:00 EST)
Consensus: 3.25%
Previous: 3.00%

Outlook: Raising the short term benchmark interest rate by 25 basis
points to 3 percent, Governor David Dodge and subsequent policy makers
elected to further tighten monetary policy in the world's eighth
largest economy. Citing rising commodity prices and rapid expansion in
the region, the Bank of Canada is attempting to curb inflationary
pressures that are flirting with the upper 3 percent benchmark allotted
for such price increases. Commodities, constituting 35 percent of the
region's exports, have risen in valuation and contributed to global
fears of raw base price increases at the producer level. Additionally,
Canada's economy is growing at a better than expected pace. Expanding
3.6 percent, the current annualized rate dwarfs the previously expected
3 percent rate while the labor market remains tight. According to the
latest labor report released by Statistics Canada, employment grew yet
again, pushing the overall unemployment rate lower to a 30-year low of
6.6 percent. Given these reasons, there is plenty of impetus for a
third consecutive increase. However, with notions that the current
price increases may be considered temporal, going forward should be
interesting once commodity prices recede. As a result, following
rhetoric, if any, should remain important to current Loonie bullish
momentum.

Reserve Bank of Australia Rate Decision (DEC)(22:30 GMT, 17:50 EST)
Consensus: 5.50%
Previous: 5.50%

Outlook: Most likely electing to leave rates unchanged at 5.5 percent,
Reserve Bank of Australia Governor Ian McFarlane remains steadfast in
his concern over the recent slowdown in consumer spending and home
building. This has ultimately led to lesser of an inflationary
environment in the fifth largest economy in the Asia Pacific region as
manufacturing has slowed considerably. Charging ahead at a 1.3 percent
expansion in the second quarter, the Australian economy looks to be
growing at a paltry 0.5 percent annualized rate in the third quarter.
In similar fashion, building approvals rose only 1.8 percent, less than
half earlier estimates with consumer sentiment dipping to a reading of
98.7. More importantly, although consumer prices have risen 3 percent
on a yearly comparison, the core figure rose only incrementally. Core
figures, which exclude volatile food and energy prices rose 0.6 percent
for the third quarter, placing the annual measure at 2 percent.
Ultimately, a rate hike at this time, although Aussie bullish, would be
unnecessary and counterproductive as policy makers look to tend to
revitalize domestic demand and production.



By DailyFX