The European Central Bank and the New Zealand Reserve Bank won't cut rates at meetings this week, while our Reserve Bank will keep rates on hold with more confirmation Friday that the domestic economy is slowing rapidly, thanks to the credit crunch, higher interest rates and the gathering impact of higher oil prices. But Japan seems to be struggling as much as other economies, such as Britain's and New Zealand's.
Figures out Friday revealed that Japan's industrial production fell, while unemployment rose and higher energy costs maintained consumer price inflation at near decade-high levels in April.
Just like parts of the eurozone, the US, Britain, Australia and New Zealand, the huge Japanese economy is being slowed by the combined effects of high oil prices, the US recession that isn't and economic sluggishness in Europe and other economies.
Japanese industrial production fell a seasonally-adjusted 0.3% in April, unemployment rose 0.2% to 4% (the highest level in seven months) and household spending slowed.
The Japanese economy experienced its slowest growth in three years in the March quarter and that sluggishness appears to have carried over into the present quarter. Offsetting this are signs that consumer spending remains resilient: not falling, but just ticking over in the face of higher energy and food prices.
Japan's April consumer price index, excluding fresh food, rose 0.9% in April, slower than March's 1.0% rise, but that was due to the one month absence of a controversial tax on petrol sales that was reinstated on May 1.
Analysts say the return of the fuel tax will see consumer inflation rebound to about 1.4% for May. European inflation hit an annual rate of 3.6% in May, up from April's 3.3% and that means no chance of a cut in interest rates.
The European Central Bank had a hard-edged target for inflation of 2%, which has been modified a bit because of the credit crunch: the central bank is not going to increase rates while questions about liquidity remain foremost in financial markets, and while consumption in particular wilts in the face of shy consumers and rising inflation, especially oil prices.
Retail sales in Germany unexpectedly fell for a second consecutive month in April as faster inflation left consumers with less money. Seasonally adjusted sales fell 1.7% from March, when they dropped 2.2%, compared to forecasts of a rise of 0.6%.
Despite the strong first quarter growth, which came mainly from a one-off rebound in the exports and the construction sector, the German economy seems to be losing momentum in the face of oil boosted inflation, and the impact of rising food prices.
German consumer prices rose at an annual rate of 3% from 2.6% in April. A jump like that would have had the old German central bank, the Bundesbank, reaching for the up lever for interest rates.
German consumer confidence is falling (as it is in the US, Australia, Japan and Britain). Despite stronger than expected first quarter economic growth in India, economists say the economy is slowing.
Economic growth jumped by an annual 8.8% in the March quarter, compared with a year earlier, thanks to the strong performances of the service and construction sectors.
But overall, the rate of expansion is slowing and economists are concerned about high inflation caused by rising food and fuel prices. The construction sector grew by 12.6% in the quarter, compared to 7.1% in the December quarter.
Growth in the manufacturing slowed to an annual 5.8%, from a frenetic 9.6% in the previous quarter. The big issue for the Government is how to allow the retail prices of oil based fuels rise, without ruining its chances at the national elections next year.
There's a growing feeling in India that the prices of petrol, diesel and kerosene will have to rise to lessen the impact on the Federal budget. State owned oil companies sell oil based products at a loss but the Indian government issues bonds to them to make up the difference, thereby keeping the real cost off budget.
But the government, like its counterparts in Malaysia, Indonesia, Thailand and Taiwan is moving towards allowing some sort of price increase (probably coupled with a fiddle on the bonds) to lessen the impact on the budget (the bonds will have to be redeemed, at some time in the future). And in the US we had further confirmation that for all the surge in US exports, it's the consumer who counts.
US exports may be running at near record levels, and US imports are down to a six year low, but the US consumer is keeping their hands in the pockets and not spending, no matter how much money is thrown at them by a nervous bunch of politicians in Washington and the White House.
The US Commerce Department reported Friday that consumer spending rose 0.2%, the same as growth in personal incomes in April. The growth in incomes would have been less than that: 0.1% except for the first economic stimulus payments that the government started sending out on April 28.
The impact on incomes should be larger in May and June, reflecting the bulk of the payments but consumers do not seem to be spending them on new gizmos: food, petrol and debt repayments seem to be favoured so far.
The Reuters/University of Michigan survey of consumer sentiment dropped for a fourth straight month in May, hitting a 28-year low of 59.8, down from 62.6 in April.
The May level was the lowest since June 1980, when Jimmy Carter was in the White House and the US was being battered by recession, the Iranian hostages crisis and high oil and energy costs from the second oil shock.
The 0.2% rise in personal incomes in April was the weakest since a similar rise in January as private wages and salaries fell on the back of around 300,000 or more job cuts in the first four months of the year.
The 0.2% rise in consumer spending followed an 0.4% increase in March. Economists say the increases have largely reflected higher fuel and food costs this year and not higher actual spending. Strip out inflation, and consumption would have been flat in April it seems.
Core inflation eased a touch, but economists say the way the figures are worked out does not really measure the extent of price pressures on US consumers at the moment.
And in Australia there's every sign the economy is approaching stalling point, after figures from the Reserve Bank on Friday showed a sharp slowdown in credit in April.
That means there's a good chance the Reserve Bank won't be tempted into an extra interest rate rise at its June meeting tomorrow. Wednesday's National Accounts figures for the March quarter will confirm the extent of the slowdown, but we could have a very low, possibly negative, growth number.
The final outcome will depend on the level of government spending and the growth in personal income, which will be higher because of wage rises and strong jobs growth in the quarter, and the level of stocks held by business.
The April credit figures showed a sharp slowdown in business lending, and a further slowing in the growth of lending for housing and personal transactions.
The Reserve Bank reported on Friday that: "Total credit provided to the private sector by financial intermediaries rose by 0.4% over April 2008, following a rise of 0.8% over March. Over the year to April, total credit rose by 14.1%."
That's the lowest monthly rise since October 2002 and shows how much the Reserve Bank's anti-inflation campaign has slowed domestic economic demand, as we saw with the 2.5% drop in March quarter capital spending figures out yesterday last week.
Lending for housing rose by 0.7%, the same as the credit crunch hit the month of August last year, for an annual rate for the year to April of 11.1%, which is a near decade low.
Both owner occupied and investor housing eased, and will probably ease further in coming months because the fall in housing approvals shows no sign of easing.
Personal lending showed no growth for the second time in four months because of margin calls from the likes of Opes Prime, Tricom, Lift Capital and other providers.
Business lending eased to grow by just 0.1% in the month, which gave an annualised rate of just over 19%. That's still solid, but the previous strong growth has eased
