Global Economic Data & News 01 (Jul 08 - Nov 15)

[ishak]

Global News

Hopes that America's housing market may have stabilised were dashed by a report from the National Association of Realtors. It showed that the number of home sales agreed on but not yet completed fell by 4.7% in May, following a rise in April. Fears that Fannie Mae and Freddie Mac, the government-sponsored mortgage giants, may have to raise capital added to stockmarket jitters.

Exports from China grew by 17.6% in the 12 months to June, to reach $122 billion. That was less than the 28.1% increase in the year to May and below expectations.

GDP in the euro area rose by 0.7% in the first quarter—revised from an earlier estimate of 0.8%—leaving it 2.1% higher than a year earlier. More recent indicators point to a far weaker second quarter. Industrial output in Germany, the currency zone’s largest economy, fell by 2.4% in May, the third successive monthly decline. Exports from Germany and France both fell in May.

There were more signs that Britain's economy is turning down sharply. Industrial production fell 0.5% in May. Fragile banks are charging more for mortgages. Figures released by the Bank of England show that, for borrowers with a 25% deposit, the fixed cost of a two-year home loan rose by 0.37 percentage points, to 6.63%, in June.

Mexico's consumer-price inflation picked up to 5.3% in June, its highest rate in almost four years.

Inflation in Taiwan rose from 3.7% in May to 5% in June.

Source: The Economist

[ishak]

Jul 17th 2008
From The Economist print edition

There was a worrying increase in inflation across the rich world. Consumer prices in America rose by 1.1% in June, leaving them 5% higher than a year earlier. This was the first time that America’s headline inflation rate had reached 5% since 1991. In Britain consumer-price inflation rose from 3.3% in May to 3.8% in June, well above the government’s target of 2%. The euro area’s inflation rate was confirmed at 4%.

In America the value of retail sales all but stalled in June, after three months of solid increases. Total sales rose by just 0.1%. Excluding cars, for which demand has been weak, the value of sales rose by 0.8%. Industrial production rose by 0.5% in June, lifted partly by the end of a car-workers’ strike.

Industrial production in the euro area fell by 1.9% in May, the biggest one-month decline since December 1992.

The Bank of Japan kept its benchmark interest rate unchanged at 0.5%, following its policy meeting on July 15th. In an update to its twice-yearly report on the economy, the bank cut its GDP growth forecasts, and raised its inflation forecasts, for 2008 and 2009.

Chinese GDP rose by an estimated 10.1% in the second quarter compared with a year earlier. Growth in 2007, when export markets were stronger, stood at 11.9%.

The number of people claiming unemployment benefits in Britain rose by 15,500 in June, the biggest one-month rise since 1992.

[ishak]

Jul 24th 2008
From The Economist print edition

The mood among businessmen in the euro area’s main economies is darkening. Surveys of business confidence in Germany, France and Italy all turned down in June.

The oil price dropped below $125 a barrel for the first time in six weeks on July 23rd. The renewed decline was prompted by fresh evidence that high prices were hurting oil demand in America.

Consumer-price inflation in Australia rose to 4.5% in the second quarter, the highest rate since 2001. Canada’s inflation rate jumped from 2.2% in May to 3.1% in June.

Faced with an increase in inflation and the prospect of a sharp economic downturn, the Bank of England’s monetary-policy committee agonised about how best to respond. The minutes of its meeting on July 9th and 10th revealed that seven of the nine-strong committee voted to leave the bank’s benchmark interest rate unchanged at 5%. One member voted for higher rates; another for a reduction. The number of mortgages approved for house purchase fell further in June, according to the British Bankers’ Association.

A survey of bank officers in Japan revealed a sharp drop in firms’ demand for loans in the past three months. Households’ demand for loans was broadly unchanged.

Brazil’s central bank raised its benchmark interest rate by three-quarters of a percentage point, to 13%, on July 23rd. The bank had already raised rates twice this year.

[millionairemind]

As usual, the rich countries want to protect their voters (read VOTE BUYING) and they don't really give a hoot that 1million farmers in the US are doing things that can be done far more cheaper elsewhere and that can help raise the living standards of the tens of millions of poor people in developing countries. Sigh...

Doha world trade talks collapse in blow to globalisation
By Edmund Conway Economics Editor
Last Updated: 8:02pm BST 29/07/2008

The Doha round of world trade talks has collapsed in what one former trade chief called the biggest blow to globalisation since the end of the Cold War.

An emergency World Trade Organisation summit aimed at resuscitating the seven-year long talks broke down in acrimony last night.

Negotiators warned that there was now little or no chance of salvaging the talks, which promised to bring down trade tariffs, pull millions out of poverty and keep food and goods prices under control.

It is the first time a major set of world trade talks has collapsed entirely, and insiders warned that the consequences would be comparatively weaker economic growth and a less globalised world in the coming years.

Although the talks broke down at a summit in Cancun five years ago and were later revived, officials warned that there was now “little or no appetite” to return to the round.

Insiders said the talks had stumbled after the United States, China and India failed to compromise on the size of their agricultural tariffs.

After nine days of emergency talks in Geneva, WTO chief Pascal Lamy broke the news to ministers from the seven biggest trading blocs that the talks had failed.

At the centre of the dispute were so-called “safeguard clauses” which allowed developing nations to slap emergency tariffs on imports if they suddenly jumped to unmanageable levels.

US negotiators apparently balked at Indian and Chinese proposals to trigger these safeguards on their cotton exports.

European Trade Commissioner Peter Mandelson said: “We have missed the chance to seal the first global pact of a reshaped world order. We would all have been winners from a Doha deal. Without one, we all lose.”

Peter Sutherland, the chairman of BP, who as director general of the WTO’s predecessor, GATT, helped bring the previous trade talks - the Uruguay round - back from the brink, said the collapse was “a disaster.”

“This is deeply disturbing,” he said. “Years of negotiation which were and are important for globalisation have been sacrificed by this failure. And there would appear to be no short-term fix.”

“This is undoubtedly the biggest blow to globalisation since [it gathered pace after] the fall of the Berlin Wall. It is a deliberate and serious blow to multilateralism, and has raised further the spectre of protectionism, which is always evident at a time of weak economic growth and recession.”

Negotiators will now discuss whether any of the progress made in the seven years of discussions can be salvaged.

However, with the Presidential election in the US next year and a change of European commissioners later this year, the consensus is that there will be no meaningful opportunity to discuss trade until at least after 2009.

[ishak]

Jul 31st 2008
From The Economist print edition

House prices in America fell by 15.8% in the year to May, according to the S&P/Case-Shiller index of prices in 20 big cities. The year-on-year decline outdid the 15.2% recorded for April.

There were fresh signs that Japan’s economy is struggling. The unemployment rate rose to 4.1% in June from 4% in May. Industrial production fell by 2% in June. That monthly drop meant that production fell for a second successive quarter. Consumer-price inflation rose from 1.5% to 1.9% in June on the central bank’s favoured gauge, which excludes fresh-food prices.

Consumer-price inflation in the euro area inched up from 4% to 4.1% in July, according to a preliminary estimate. The unemployment rate was stable at 7.3% in June. Confidence in the economy fell to its lowest level in five years, according to a monthly survey by the European Commission.

India’s central bank raised its benchmark interest rate by half a percentage point, to 9%, on July 29th, the third increase in less than two months. The bank said it aimed to bring inflation down to a more “tolerable” level as soon as possible.

GDP in Britain rose by 0.2% in the second quarter, leaving it 1.6% higher than in the same quarter in 2007. Figures from the Bank of England showed that the number of mortgages approved for house purchase fell to 36,000 in June, the lowest level since comparable records began in 1993.

[kennynah]

GDP in Britain rose by 0.2% in the second quarter, leaving it 1.6% higher than in the same quarter in 2007

this is a surprise...at least i am...

[ishak]

Aug 7th 2008
From The Economist print edition

The Federal Reserve left its benchmark interest rate unchanged, at 2%. The Fed’s statement suggested its concerns about America’s GDP growth and inflation were broadly balanced. Employers, excluding farms, cut payrolls by 51,000 in July. The unemployment rate rose from 5.5% to 5.7%.

There was fresh evidence that the euro area’s economy is struggling. Retail sales fell by 0.6% in June, leaving them 3.1% lower than in June 2007. Sales in Spain were particularly weak, down 7.7% from a year earlier. Factory orders in Germany fell for a seventh consecutive month in June.

Industrial production in Britain fell by 0.2% in June, leaving it 1.6% lower than it had been a year earlier.

The Bank of Korea raised its benchmark interest rate by a quarter of a percentage point, to an eight-year high of 5.25%. South Korea’s central bank considers inflation a bigger worry than a weakening economy. Indonesia’s central bank also raised rates by a quarter-point, to 9%.

The Reserve Bank of Australia kept its benchmark interest rate at 7.25%. It hinted that it might cut rates soon.

Forecasts for GDP growth in 2008 were lowered for eight of the 14 economies featured in The Economist’s monthly poll of forecasters. America was an exception. Its GDP growth forecast was revised up slightly, from 1.4% to 1.5%.

[ishak]

Aug 14th 2008
From The Economist print edition

GDP in the euro area fell by 0.2% in the second quarter, leaving it 1.5% higher than a year earlier. GDP dropped in each of the currency zone’s three largest countries. Germany’s GDP fell by 0.5%, though much of that was payback for a remarkably strong first quarter. GDP in France and Italy both fell by 0.3%.

America’s trade deficit in goods and services narrowed from $59.2 billion in May to $56.8 billion in June, thanks to a big surge in exports. The value of retail sales fell by 0.1% in July, the first decline for five months. Excluding cars, sales rose by 0.4%.

Japan’s GDP fell by 0.6% in the April-June quarter, leaving it 1% higher than a year earlier. Consumer confidence plunged to its lowest level on record.

Consumer-price inflation in Britain rose to 4.4% in July. The Bank of England forecasts that inflation is likely to rise above 5% in the coming months. The unemployment rate, based on a survey of households, inched up to 5.4% in the three months to June. The number of people claiming unemployment benefit rose by 20,100 in July, the biggest monthly increase since 1992.

The value of retail sales in China rose by 23.3% in the year to July, its biggest increase in at least nine years. Consumer price-inflation fell for a third consecutive month in July, to 6.3%. China’s trade surplus rose to $25.3 billion, a 4% increase from a year earlier.

[ishak]

Aug 21st 2008
From The Economist print edition

America’s housing market is struggling to recover. The number of housing starts fell by 11% in July, leaving them at their lowest level since 1991. The decline reversed a big jump in June, prompted by a surge in starts in New York ahead of tighter building regulations. The confidence index compiled by the National Association of Home Builders remained at a record low in August.

There are worrying signs of a broadening impact on inflation from past increases in commodity prices. In America factory-gate prices for goods other than food and energy rose by 3.5% in the year to July—the fastest increase since 1991. Meanwhile Germany’s producer-price inflation, excluding energy, rose from 3% to 3.6% in July.

Japan’s central bank kept its benchmark interest rate unchanged at 0.5% on August 19th. The bank reckons that GDP growth will probably “remain sluggish” in the near term.

Business confidence in France fell for a sixth straight month in July, according to the central bank. The survey suggests that French GDP will rise by just 0.1% in the third quarter.

The Bank of England’s monetary-policy committee debated the merits of both an increase and a cut in interest rate on August 6th and 7th. The minutes to the policy meeting revealed that seven of the nine-strong committee opted to keep the bank’s benchmark interest rate at 5%. In a repeat of the decision in July, one member voted for higher rates and another for a reduction.

[ishak]

World trade growth slows to 7-yr low in Q2
CPB Netherlands Bureau for Economic Policy Analysis
Subject : World trade monitor: June 2008
Date : 22 August 2008

GENEVA - Growth in world trade slowed in the second quarter of this year to its lowest for nearly seven years, the CPB Netherlands Bureau for Economic Policy Analysis said on Friday.

In the three months ended June, world trade rose by only 0.6 per cent at an annual rate compared with the previous three months, CPB said.

'This is the weakest quarterly performance since the drop in world trade in the final quarter of 2001,' it said in its monthly analysis of global trade flows.

CPB provides trade data to the EU Commission for its surveys of the euro area, and also works closely with the World Bank on its trade series.

Steeply falling US imports were one of the main factors in the weak second-quarter growth, which followed a rise of 7.1 per cent in the first quarter, it said.

On a 12-month perspective, trade growth has been slowing steadily since late 2006, CPB data show.

Trade in the 12 months ended June was 6.0 per cent higher than in the previous 12 months, compared with a high in the current cycle of 9.4 per cent in 2006, it said.

World trade volume

World trade volume dropped by 1.3% in June from the previous month based on preliminary data, following a drop of 0.6% in May (marginally revised down from -0.5%). In June, the strongest import drop occurred in the EU15 (-2.4%), while Japanese imports rose steeply (+6.2%). The emerging economies experienced the strongest export drop (-3.7%), while US exports rose substantially (+4.1%).

Monthly trade numbers are volatile and focus on 3-months moving average (momentum) is therefore preferable. In the three months up to June (second quarter), world trade was up by just 0.6% at an annual rate from the preceding three months. This is the weakest quarterly performance since the drop in world trade in the final quarter of 2001. Growth in the second quarter is clearly less than in the previous period: in the three months up to March (first quarter), world trade was up by 7.1%. Steeply falling US imports were a main contributor to weak second quarter world trade growth.

World trade volume growth continues to be on a downward trend, based on twelve months over the previous twelve months (see final graph). In June, growth was 6.0%, down from the record high of 9.4% in November 2006.

World trade prices

World trade prices measured in US dollars increased by 2.2% in June from the previous month, after a rise of 1.8% in May (revised up from 1.6%). In June, energy prices continued to rise by far the steepest.

Monthly trade numbers are volatile and focus on 3-months moving average (momentum) is therefore preferable. In the three months up to June (second quarter), world trade prices were up by 29.4% at an annual rate from the preceding three months. This is even stronger than the rise in the previous period: in the three months up to March (first quarter), world trade prices were up by 20.1%. In the most recent period, prices of manufactured goods and non-energy raw materials rose steeply, while prices of energy were skyrocketing.

The release of the next monitor is tentatively scheduled for Friday September 19.