Most of the data published regarding the European economy were disappointing, suggesting the continued recession.
Industrial production in the Eurozone decreased during the month of January by a monthly rate of 0.4% (versus an expected -0.1%), to a level indicating a yearly shrinkage of 1.3%.
The volume of production in the Eurozone decreased during four out of the last five months.
Additionally, in spite of the slight improvement in some of the expectation surveys in Europe, leading indices are still at a low level.
Such low levels may serve as an indication for the continuation in the shrinkage of industrial production, and an expected continued recession at the Eurozone.
A single bright spot in the disappointing data is the ongoing improvement in economic data from Germany, following a sharp shrinkage in Q4 of 2012.
A decrease was recorded in Germany’s trade surplus during the month of January, but examining the different trade components reveals a monthly increase by 1.4% in German exports, to a level indicating an annual increase of 2.4%, and an increase of 3.3% at German import of goods, to a level indicating an annual increase of 2.3%.
Increasing the volume of the quantitative easing during this year, seems likely.
Towards the end of the week, the Japanese government approved the appointment of Haruhiko Kuroda as the new governor of the central bank.
The new governor emphasized lately the importance of implementing a very expansionary monetary policy to support the Japanese economy.
During last week, the governor noted that the central bank would consider purchasing derivatives as part of the quantitative easing program.
Another testimony to the importance of expanding the monetary incentives was received this week with the publishing of a sharp decline in the volume of Japanese Machinery Orders by factories (-13.3% monthly rate in January, to a level indicating an annual drop of 9.7%).
We note that the Yen has weakened compared to the Dollar by a very sharp ratio, ever since poll results predicted that the Japanese government will be replaced and that the new Prime Minister, Shinzo Abe, will choose an expansionary monetary policy and demand that the central bank implements a more aggressive monetary policy.