U.S. Pending Home Sales Surge To 2006 High

The National Association of Realtors (NAR) reported that pending sales of single-family homes increased 3.4% during April following a little-revised 1.2% gain during March. The latest level was the highest level since December 2006.

Eurozone Private-Sector Lending Flat

Loans to eurozone households and businesses were flat on an annual basis in April, the ECB data showed, after growing by 0.1% in March. The ECB’s broad measure of money growth, M3, grew by 5.3% year-over-year, after increasing by 4.6% in March, an indication that the ECB’s €60 billion ($65.5 billion) a month bond purchase program is raising the bloc’s money supply even if those funds aren’t yet being fully channeled into new lending and investment. (…)

Separately, Germany’s statistics office reported that retail sales exceeded expectations in April, rising by 1.7% versus March. Forward-looking surveys bode well for German consumption, which has been supported by low unemployment and rising wages.

By contrast, French consumer spending rose only 0.1% last month from March, and growth in March was revised lower. Data earlier this week showed French consumer confidence slipped in May for the first time since October.

Japan Inflation Slips to Zero

Household spending fell 1.3% in April from a year earlier, the government said, confounding economists’ expectations for a solid increase. The decline was surprising considering the low level of spending in the year-earlier month in which the sales tax was raised, sending consumption plunging.

The drop in spending came despite a 2 per cent rise in real incomes for working households.

The annual inflation rate also registered zero in April on falling prices of energy and television sets. The zero reading, while better than expected, was the second time in three months that prices have stayed flat, another indication that anemic demand is undermining efforts by the Bank of Japan spearheading Mr. Abe’s campaign to squash a long bout of deflation and generate 2% inflation.

A poll of consumers released recently by the Consumer Affairs Agency showed that only 3.2% of respondents plan to increase spending over the coming three months. The figure, while subject to revisions, is the lowest since the launch of the survey in October 2013.

Economists also suspect that structural obstacles may be in play. They include a shrinking and rapidly aging population and conservative spending habits of younger generations after decades of economic stagnation, they said. (…)

Japanese unemployment rate falls to 3.3% Workers fail to extract pay rises needed to boost consumption

Job vacancies in Japan are at their highest in 23 years, while the unemployment rate fell to its lowest level since the late 1990s as the labour market tightens.

According to data released on Friday, the ratio of jobs to applicants rose to 1.17 times in April — up from 1.15 times the month before — while the unemployment rate fell to 3.3 per cent.

Used handbags provide an unlikely barometer for Japan’s economy

“The overall mental state of shoppers in Japan is gradually getting more positive than before,” says Takuji Ishihara, president of Komehyo, the country’s biggest dealers of used high-end bags. “But in the second-hand luxury goods market, it is even more obvious.”

Mr Ishihara believes a rise in inventories at Komehyo points to an improvement in consumer sentiment that cannot be seen in headline economic data — a series that shows consumption has been falling for 13 straight months.

Before the growth-focused policies of Abenomics took hold in 2013, he says, Japanese women were selling their most cherished goods in a state of discreet financial squeeze, cashing in to buy mundane items or, at best, a different second-hand bag. Now they are doing so with almost no social stigma, because they fancy a nicer bag, an indulgent dinner out or a holiday.

“They are selling their bags to raise cash for a more adventurous purchase,” says Mr Ishihara, “and that seems to be supported by a feeling that their salaries might rise over the next year.” (…)

Particularly noteworthy, says Mr Ishihara, has been how quickly customers have used their handbags to make a crafty play on the falling Japanese currency. (…)

“The yen has created a lot of handbag sellers,” says Mr Ishihara, “because they realise that the currency is pushing Komehyo’s buying prices up and the bags are worth significantly more than they were before. Many of them are deciding to use the extra windfall to buy a better second-hand bag, but also they are using the money to go to restaurants or travel.” (…)

Switzerland’s Economy Shrinks

Gross domestic product in the three months through March fell 0.2% from the previous quarter and was 1.1% higher from the same period last year, the Federal Department of Economic Affairs, Education and Research said. The result was below economists’ expectations for a quarterly contraction of 0.1% and annual expansion of 1.6%.

Growth in private consumption and investment in equipment failed to offset the decline in virtually all sectors of the Swiss export sector, from luxury goods to industrial equipment and pharmaceuticals.

Swiss goods exports dropped 2.3% in the quarter from the previous three months, with pharmaceutical, chemical and industrial machinery sales hit particularly hard by the strong franc.

Oil gains 1 per cent on U.S. inventory drop

(…) Data from the U.S. Energy Information Administration (EIA) on Thursday showed crude oil inventories fell by 2.8 million barrels last week, down for the fourth week ahead of Monday’s Memorial Day holiday, which unofficially kicked off the peak summer driving season in the United States.

The fall in crude stocks in the EIA data was more than the 857,000-barrel drawdown forecast in a Reuters survey and contrary to the build of 1.3 million barrels estimated by the American Petroleum Institute.

From Raymond James:

“Big Three” petroleum inventories (crude, gasoline, distillates) fell by 5.0 MMBbls, versus consensus estimates for a draw of 3.7 MMBBls. Crude inventories fell by 2.8 MMBbls, versus consensus calling for a draw of 2.0 MMBbls. Cushing crude inventories fell by 0.4 MMBbls, with Gulf Coast inventories down 1.0 MMBbls.