The Lastest Macroeconomic News
30.10.2010 14:45 US GDP rose at an inflation-adjusted annual rate of 2% in the third quarter
The U.S. economy remains mired in a sluggish recovery, unable to grow fast enough to create the masses of jobs needed to bring down unemployment. Gross domestic product, the broadest measure of the goods and services produced by the economy, rose at an inflation-adjusted annual rate of 2% in the third quarter, up from 1.7% in the second quarter, the government said. Businesses increased investment in equipment and—for the first time in more than two years—in buildings. Consumer spending accelerated, marking its strongest growth since late 2006, though much of the added spending went for imports. Much of the third-quarter growth came from businesses building inventories, an unsustainable source of growth. Exports of goods and services grew at a 5% pace, but imports rose 17.4%. Residential construction plunged in the wake of the expiration of the home-buyer tax credit. State and local government spending contracted, as it has in six of the past eight quarters. Business spending on equipment and software jumped 12% in the third quarter, the GDP report showed, well below the nearly 25% pace of the second quarter—but still a sign that businesses are cautiously retooling. Business spending on structures rose 3.9%, the first increase since the second quarter of 2008. Inventories grew by $115.5 billion, accounting for 1.4 percentage points of the 2% gain in GDP. Meanwhile, wages continue to grow slowly. The Labor Department said that its employment cost index, a broad measure of salaries and benefits, increased 0.4% in the third quarter, down from 0.5% in the second quarter. The cost of benefits, which accounts for about a third of the measure, increased faster than growth in wages and salaries.
21.10.2010 23:29 China`s GDP growth slowed down to 9.6 percent in the Q3 2010
China`s GDP growth slowed down in the third quarter to 9.6 percent from 10.3 percent last quarter, a report by the National Bureau of Statistics said. Industrial production also fell from the previous quarter to 13.5 percent. However, industrial production rose 16.3 percent during the three quarters of the year in total, the report stated. Economists were expecting a growth of 9.5 percent. China also saw an increase in domestic markets and consumer prices, along with incomes of people in both urban and rural areas. In a surprise move, China raised interest rates on Tuesday for the first time since 2007, to 5.56 percent from 5.31 percent. Deposit rates were also increased to 2.5 percent from 2.25 percent. Analysts believed the rate increase was to combat with excessive liquidity and inflationary pressures. However, consumer prices rose by 3.6 percent from last year in September, the report stated. China`s policies have been deeply scrutinized over the past few months as the U.S. and the European Union pressurize the country to let its currency appreciate, which would help improve imports into the nation and reduce massive trade deficits of the two regions. China reported a trade surplus of $2.15 billion for the first three quarters of 2010, up 38 percent. Trade surplus was $16.9 billion in September, most of it with the EU and the U.S. However, the surplus has been narrowing in the past couple of months, as the yuan appreciates marginally and domestic spending in China increased. Total retail sales in the first three months of the year rose by 18 percent from last year, the report said. Economists expect GDP to grow about 10 percent this year and about 9 percent in 2011.
10.10.2010 15:08 Euro area GDP increased by 1.9% during the second quarter of 2010
Euro area (EA16) and EU27 GDP increased by 1.0% during the second quarter of 2010, compared with the previous quarter, according to second estimates from Eurostat, the statistical office of the European Union. In the first quarter of 2010, growth rates were +0.3% in the euro area and +0.4% in the EU27. In comparison with the same quarter of the previous year, seasonally adjusted GDP increased in the second quarter of 2010 by 1.9% in the euro area and by 2.0% in the EU27, after +0.8% and +0.7% respectively in the previous quarter. In the second quarter of 2010, Lithuania (+3.2%) recorded the highest growth rate compared with the previous quarter, followed by Germany (+2.2%), Estonia, Finland and Sweden (all +1.9%). In the second quarter of 2010, household2 final consumption expenditure increased by 0.2% in both the euro area and the EU27 (after +0.2% and +0.3% respectively in the previous quarter). Investments increased by 1.5% in the euro area and by 1.8% in the EU27 (after -0.3% and -0.6%). Exports increased by 4.3% in the euro area and by 4.1% in the EU27 (after +2.5% and +2.2%). Imports increased by 4.0% in the euro area and by 3.8% in the EU27 (after +4.2% and +3.8%). Among the main partners of the EU, GDP increased by 0.4% in the US in the second quarter of 2010 (+0.9% in the previous quarter). In Japan GDP also increased by 0.4% in the second quarter of 2010 (after +1.2%). Compared with the second quarter of 2009, GDP increased by 3.0% in the US (+2.4% in the previous quarter) and by 2.4% in Japan (after +4.4%).
16.09.2010 18:46 Russian industrial production rose an annual 7 percent in August 2010
Russian industrial production accelerated last month, regaining momentum after record-high temperatures reduced manufacturing and farming output in July. Output at factories, mines and utilities rose an annual 7 percent after a 5.9 percent advance in July, the Federal Statistics Service in Moscow said. The median estimate of 13 economists in a Bloomberg survey was for an annual increase of 5.7 percent. Non-seasonally adjusted output rose 0.1 percent from the previous month. Russia’s government targets economic expansion of 4 percent this year even as the country’s worst drought in at least a half century may shave 0.8 percentage point off growth. Manufacturing expanded last month at the fastest pace since April 2008 as increasing domestic demand helped producers, HSBC Holdings Plc’s gauge showed on Sept. 1. “The Russian economy is still on a strong recovery trend,” Maxim Oreshkin, chief strategist for Russia and the Commonwealth of Independent States at Credit Agricole SA in Moscow, said in a note before today’s release. “The first phase of the inventory cycle and export-demand-led recovery was replaced with a second one driven by consumer demand.” Domestic spending helped new car sales jump 51 percent in August from the same month last year as buyers took advantage of the government’s cash-for-clunkers program. The government is spending at least 21.5 billion rubles ($696 million) this year on cash incentives for automobile purchases. The economy gained an annual 4.2 percent in the first half, the Federal Statistics Service said on Sept. 9. GDP expanded an annual 5.2 percent in the second quarter and 3.1 percent in the previous three months. The Economy Ministry predicts that industrial production will gain 7.6 percent in 2010.
30.08.2010 22:43 The US economy rose at a 1.6 percent pace in 2010`s second quarter
The US economy rose at a 1.6 percent pace in 2010`s second quarter, a number that`s disappointingly tepid but still keeps hope alive that the US will avoid a dip back into recession this year. The number represents a sharp decline in the speed of economic recovery compared to the first quarter, when the gross domestic product (GDP) grew at a 3.7 percent pace. The Friday morning report from the Commerce Department also represented a downward revision to its initial estimate for the second quarter (2.4 percent) from a month ago. A bright spot is that consumer spending, which represents the core of the economy, has risen at least modestly for four straight quarters. The pace remains slower than normal in an economic recovery, however. Worries that the United States may fall back into recession have weighed on financial markets in recent weeks. Americans` disposable personal income has risen in both quarters so far this year, helping to sustain spending growth even as people have boosted their savings, according to the GDP numbers. But the growth pace is tentative. Personal consumption grew at just a 2 percent annual pace in the second quarter. Some factors that affected GDP in the second quarter have been shifting as the calendar has ticked into the year`s second half. The end of special tax credits for home buyers has caused a stall in housing market activity. State governments are moving to cut spending after making a small positive contribution to GDP in the second quarter. Those factors could weigh on domestic consumption. But one big negative in the second quarter was a surge in imports. The purchase of goods from overseas is counted as a subtraction from GDP (while exports add to domestic output). Without the import boom, GDP would have been 4.45 percentage points higher in the quarter. "Imports can be lumpy, and the leap recorded in Q2 undoubtedly reflected efforts to replenish inventories that began earlier," writes Joshua Shapiro, chief US economist at MFR Inc. in New York. Many forecasters say that economic reports so far in the third quarter suggest the economy is still growing, but so slowly that job growth has stalled. A key problem is confidence: Many consumers are reluctant to spend, and employers are in a kind of hiring freeze as they wait for a revival in demand. Employers say they`re worried about whether Washington will provide a business-friendly policy environment.Credit conditions may also be holding the recovery back. Bank credit expanded in the Federal Reserve`s most recent monthly report, so this problem may be starting to ease. Even in an economy in which many households are struggling with high debt loads, economists see the flow of new credit as an important foundation for growth.
09.08.2010 21:36 Goldman Sachs Lowers Forecast for Japan, U.S. Growth
Goldman Sachs Group Inc. cut its growth forecasts for the world’s two largest economies on signs that stimulus boosts will wane. Japan will grow 1.4 percent in 2011, compared with an earlier forecast of a 1.7 percent expansion, Tokyo-based senior economist Chiwoong Lee said in a report dated Aug. 7. Goldman last week lowered its projection of U.S. growth for the same year to 1.9 percent from 2.5 percent. A report today showed Japan’s current-account surplus narrowed for a second month as export gains cooled, adding to concerns that the recovery is losing steam. Government incentives that have bolstered spending at home are wearing off, with economists forecasting second quarter gross domestic product grew at half the pace of the previous period. “We expect signs that growth is slowing to gradually emerge in line with the disappearance of the government stimulus boost both in Japan and abroad,” Lee wrote in a separate report dated today. “The U.S. economic recovery has lost a considerable amount of its momentum.” Japan will experience a “significant falloff” in consumer spending, which has so far been propped up by government measures, according to Lee. He noted that there is “little chance” Prime Minister Naoto Kan will extend a program scheduled to expire in December that encourages household to buy energy-efficient electronics. Japan’s jobless rate is at a seven-month high and factory output fell in June. The GDP report due Aug. 16 may show that the expansion moderated to an annualized 2.1 percent from 5 percent in the previous quarter, according to the median estimate of 11 economists surveyed by Bloomberg News. Lee said Japan’s export gains are already losing steam and will be “sluggish” in 2011 given a worsened outlook for the expansion in the U.S. U.S. growth will be slower in 2011 because of lawmakers’ resistance to extend several stimulus measures, Lee said. The unemployment rate, which was at 9.5 percent in July, may climb to 10 percent “by early 2011,” he said. That may prompt the Federal Reserve to return to “unconventional monetary easing,” such as increasing its purchases of Treasuries, he added.
25.07.2010 19:39 Ben S. Bernanke said U.S. economy still in need of stimulus
Federal Reserve Chairman Ben S. Bernanke said extending at least some of the tax cuts set to expire this year would help strengthen a U.S. economy still in need of stimulus and urged offsetting the move with increased revenue or lower spending. “In the short term I would believe that we ought to maintain a reasonable degree of fiscal support, stimulus for the economy,” Bernanke said yesterday under questioning from the House Financial Services Committee`s senior Republican. “There are many ways to do that. This is one way.” While Democrats want to keep the 2001 and 2003 tax reductions passed during former President George W. Bush`s administration for families earning as much as $250,000, Republicans aim to continue the cuts for high-income people as well. Bernanke didn`t endorse either party`s position or recommend a time period for an extension. “In the longer term, I think we need to be taking steps to reassure the American people and the markets that our fiscal situation is going to be well controlled,” Bernanke said under questioning from Representative Spencer Bachus of Alabama, the committee`s senior Republican. “That means that if you extend the tax cuts, you need to find other ways to offset them.” Bernanke aims to bolster the faltering economic recovery while urging lawmakers to reduce federal budget deficits in the medium term, which he defined as the period from 2013 to 2020. His predecessor, Alan Greenspan, last week said lawmakers should allow the tax cuts to expire at the end of 2010, citing a need for the revenue to reduce the budget gap.
20.07.2010 21:28 U.S. industrial production up 0.1% in June 2010
U.S. industrial output rose 0.1% in June as higher mining and utility production offset a decline in manufacturing, the Federal Reserve reported. The increase was a modest upside surprise, as economists were expecting a 0.1% decline after a 1.3% increase in May. Industrial output is up 8.2% compared with a year ago after falling at the fastest rate since World War II. Capacity utilization, a key gauge of inflationary pressures, was unchanged at 74.1%. Manufacturing output fell 0.4% in June after a 1% gain in May. It was the first decline since February.
11.07.2010 18:26 IMF`s growth forecast increases but still faces threats
The global economy may be recovering faster over the expectations of many analysts and economists. However there may still be a delay if there is still the presence of the debt crisis in Europe. International Monetary Fund in a statement last Thursday also said the government should restore the confidence of the public. IMF raised the world growth forecast from 4.2 in April to 4.6 percent. It also had a much higher growth percentage for U.S. and China. However, the quarterly World Economic Outlook may warn that there are threats fast emerging, that is why Europe has to settle their debt problems and they should bring back the confidence in their banks. Fortunate enough, the risks are limited only to the financial markets and will table activity at a high level in May. IMF also said that industrial output and trade increased by double digits and there was a gradual recovery in advanced countries and a fast growth in developing countries. The IMF raised America`s growth forecast for 0.6 percent as the growth increased to 3.3 percent from 2.7 percent. According to Olivier Blanchard, director of the IMF`s research department, “The numbers for economic activity have come in strong — in fact, stronger than we have forecast. A global double dip is very unlikely.” IMF also predicted the growth among Asian countries particularly, China, Japan, and India. China`s forecast will go from 10 percent to 10.5 percent. Japan`s growth forecast will increase by 0.5 percent as their growth will increase from 1.9 to 2.4. And for India, IMF predicted that they would experience 0.6 percent growth from 8.8 percent to 9.4 percent. The region`s growth is estimated to have an increase of 0.5 percent from 7 percent to 7.5 percent. However, IMF warned that the crisis in Europe “would affect Asia through both trade and financial channels.” There has been a weakening confidence in the comeback from last year`s recession due to weak data from major economies in the most recent weeks. The prediction for next year however, decreased, as the growth remained unchanged at 4.3 percent. IMF lowered their growth forecast for the year 2011 countries like Japan, China, and Britain. Japan will decrease from 2 percent to 1.8 percent. China will decrease from9.9 percent to 9.6 percent. Finally, Britain will decrease from2.5 to 2.1.
02.07.2010 11:42 Fitch Raises Global Growth Outlook, Says Recovery On Track
Fitch has revised up its global growth forecast for 2010 to 3.1% from 2.8% estimated previously, citing strong first quarter growth results of Japan, and BRIC economies. The global economic recovery remains on track, despite the increase in volatility within sovereign debt markets, Fitch Ratings said in its quarterly Global Economic Outlook report published Thursday. Meanwhile the US, euro area, and the UK are performing in line with Fitch`s previous projections, the report said. Fitch expects global economy to grow 2.9% in 2011 and 3.3% in 2012. "Sovereign credit worries in Europe have taken a toll on consumer confidence and unsettled capital markets," says Brian Coulton, Managing Director of Fitch`s Sovereigns group. "In Fitch`s view, although the risk of European countries falling into a double-dip recession has increased, the likelihood that fiscal consolidation could drive the major advanced economies as a whole into a renewed recession in the near term is low," Coulton noted. BRIC refers to Brazil, Russia, India and China, which may, apparently, eclipse the combined economies of the current richest countries of the world.