Prices in China declined for second month; Australia business conditions weak

China performed a monthly deflation in June as consumer price index reported a 0.1% decline in the last month. Reading was against expectations that the prices would remain unchanged in the Asian giant in the sixth month of the year. May number was another deflation of 0.2%.

Year over year, prices rose at a rate of 1.9% in China. June is an increase in the inflation from 1.8% in May.

News from China also said that the producer price index rose 4.7% in June, well above 4.5% expected by the market and from May’s figures of a PPI inflation of 4.1%.

The PPI increase came just at the early stages of the trade war. In this framework, China and Germany signed a raft commercial accord worth 20 billion euros that aims to keep trade free.

The deal involves German companies like Siemens, Volkswagen and BASF and two exporting powerhouses from China. German Chancellor Angela Merkel said that Germany and China should prevent further trade conflicts.

“I hope that the upcoming EU-China in China brings more progress such as in investment protection agreements,” Merkel said in a joint conference press with Chinese Prime minister Li Keqiang.

Australia Business conditions come weaker than expected

National Australia Bank’s Business conditions reported a reading of 15 in June; it is up from a revised number of 14 in May, but well below market’s expectations of an increase to 18 points.

The business confidence also came on the weak note as it stayed unchanged at six between May and June, while market waited for an increase to 8 points.

According to Alan Oster, NAB Group Chief Economist, “conditions remain well above average after increasing in early 2018, with the strength spread across most industries. Conditions in the retail industry continue to lag those of the other industries.”

At the same line, “business confidence continued to hover at an around average level after also easing recently. While forward looking indicators have weakened a little, they still point to favourable business conditions for the rest of 2018.”

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