Category Archives: Trade

Claims/Trade Data

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Karim writes:

Claims:
Initial claims was unambiguously weak, rising to 380k, the highest level since January. The prior week was also revised higher, from 357k to 367k.

The labor department cited no special factors despite it being Easter week; the USVI was the only locale where claims were estimated for the holiday.

Trade Balance:
The trade deficit fell to its lowest level since October, largely due to an 18% drop in imports from China (Lunar New Year effect) and a drop in oil imports.

The data may push Q1 GDP estimates to as high as 3% but that should not be confused with a pick-up in the underlying strength of the economy.

The stalling out in the claims data last month did a good job of predicting the slowdown in payrolls. Today’s data throws further job market improvement into greater question.

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A note from S&P’s John Chambers

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This makes me sleep a lot better…

November 15, 2011

Dear Warren,

On Nov. 11-12, I spoke at the Caixin Summit 2011 in Beijing on the subject of who will solve the debt crisis. My comments pertained to the euro area and to the rest of the world, and I stated that, in Standard & Poor’s view:

  • External imbalances are as much at the root of the current crisis as fiscal imbalances;
  • Better coordination among international policymakers can help to attenuate these external imbalances;
  • Prior domestic economic reforms will facilitate coordination;
  • Generally, a high level of financial claims is more of a symptom of past failures to reform than the disease itself;
  • If international cooperation and economic reform come up short (which is not our base case), global growth could sputter, public and private sector indebtedness could remain high, and some speculative-grade sovereigns could resolve their fiscal difficulties through default.

Standard & Poor’s believes that what is taking place in the euro area, in several respects, is a microcosm of what is happening globally.

To read my full comments, please click here to access the article.

Please contact me with any comments or questions.
Sincerely,

John Chambers
Chairman of the Sovereign Ratings Committee

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Korea Exports decline

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Not wrong to think ‘falling off a cliff’ after reading this.

Global demand is softening as public sector deficit spending remains insufficient to offset the relatively low levels of private sector ‘borrowing to spend’:

S.KOREA REVISED OCT EXPORTS +8.0 PCT YR/YR VS PROVISIONAL +9.3 PCT REPORTED EARLIER
S.KOREA SAYS OCT EXPORTS TO EU FALL 20.3 PCT YR/YR, SHARPEST DROP SINCE SEPT 2009
S.KOREA SAYS OCT EXPORTS TO U.S. FALL 3.6 PCT YR/YR, SHARPEST DROP SINCE DEC 2009
S.KOREA SAYS OCT EXPORTS TO CHINA RISE 14.6 PCT YR/YR, SLOWEST GROWTH SINCE APRIL

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SZ News

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Budget surplus, strong currency to the point where it weakens exports if they don’t buy sufficient fx to keep the currency down. Fits the pattern.

Swiss July Consumer Indicator Declines to Lowest in 1 1/2 Years
Aug. 30 (Bloomberg) — A gauge of Swiss consumer demand dropped to the lowest in 1 1/2 years in July, adding to signs the economy is cooling.

The consumption indicator declined to 1.29 from a revised 1.52 in the previous month, Zurich-based UBS AG said in an e-mailed statement today. That’s the lowest since February 2010. It had previously reported a June reading of 1.48.

Switzerland’s Government Expects Budget Surpluses Through 2013
Aug. 30 (Bloomberg) — Switzerland’s government said it expects to post budget surpluses in every year through 2013.

The consolidated surplus for the state, cantons, communities and the country’s social-security system will widen to an estimated 0.8 percent of gross domestic product this year from 0.4 percent in 2010, the government in Bern said in an e-mailed statement today. In 2012 and 2013, the surplus may narrow
to 0.6 percent and 0.5 percent of GDP, respectively.

Public debt under the European Union’s so-called Maastricht criteria will decline to an estimated 36.4 percent of GDP this year from 38.4 percent in 2010, according to the statement. In 2012 and 2013, it is seen decreasing to 35.7 percent and 34.1 percent, respectively.

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Jobless Claims Dip, Still in Range; Trade Deficit Jumps

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As previously discussed, the real economy seems to be muddling through, and at firmer levels than the first half of the year.

The trade report will probably result in Q2 GDP being revised down to just below 1%, but up from the .4% reported for Q1

So Q3 still looks like it will be at least as strong as q2 and likely higher with lower gasoline prices and Japan coming back some.

With corporate profits still looking reasonably strong, corporations continue to demonstrate they can do reasonably well even with low GDP growth and high unemployment.

And with a federal deficit of around 9% of GDP continually adding income, sales, and savings I don’t see a lot of downside to GDP, sales, and profits, though a small negative print is certainly possible.

Jobless Claims Dip, Still in Range; Trade Deficit Jumps

August 11 (Reuters) — New U.S. claims for unemployment benefits dropped to a four-month low last week, government data showed on Thursday, a rare dose of good news for an economy that has been battered by a credit rating downgrade and falling share prices.

Initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 395,000, the Labor Department said, the lowest level since the week ended April 2.

Economists polled by Reuters had forecast claims steady at 400,000. The prior week’s figure was revised up to 402,000 from the previously reported 400,000.

The Federal Reserve said on Tuesday economic growth was considerably weaker than expected and unemployment would fall only gradually. The U.S. central bank promised to keep interest rates near zero until at least mid-2013.

Hiring accelerated in July after abruptly slowing in the past two months. However, there are worries that a sharp sell-off in stocks and a nasty fight between Democrats and Republicans over raising the government’s debt ceiling could dampen employers’ enthusiasm to hire new workers.

The continued improvement in the labor market could help to allay fears of a new recession, which have been stoked by the economy’s anemic growth pace in the first half of the year.

A Labor Department official said there was nothing unusual in the state-level claims data, adding that only one state had been estimated.

The four-week moving average of claims, considered a better measure of labor market trends, slipped 3,250 to 405,000. Economists say both initial claims and the four-week average need to drop close to 350,000 to signal a sustainable improvement in the labor market.

The number of people still receiving benefits under regular state programs after an initial week of aid dropped 60,000 to 3.69 million in the week ended July 30.

The number of Americans on emergency unemployment benefits fell 26,309 to 3.16 million in the week ended July 23, the latest week for which data is available.

A total of 7.48 million people were claiming unemployment benefits during that period under all programs, down 89,945 from the prior week.

Trade Gap Grows

The US. trade gap widened in June to its largest since October 2008, as both U.S. imports and exports declined in a sign of slowing global demand, a government report showed on Thursday.

The June trade deficit leapt to $53.1 billion, surprising analysts who expected it to narrow to $48 billion from an upwardly revised estimate of $50.8 billion in May.

Overall U.S. imports fell by close to 1 percent, despite a rise in value of crude oil imports to the highest since August 2008. Higher volume pushed the oil import bill higher, as the average price for imported oil fell to $106 per barrel after rising in each of the eight prior months.

U.S. exports fell for a second consecutive month to $170.9 billion, as shipments to Canada, Mexico, Brazil, Central America, France, China and Japan all declined.

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France reports record trade gap in May

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The overall trade picture continues to appear to be ‘deteriorating’ and could be removing fundamental support for the euro.

Yes, German net exports remain firm, but it’s the euro zone as a whole that drives the value of the euro.

And higher prices for imported energy could be hurting the euro zone more than the US, as they import their natural gas as well and pay more for it.

France reports record trade gap in May

July 7 (Xinhua via COMTEX) — Sluggish exports and soaring costs of imported petroleum products drove higher France’s trade deficit to a record of 7.42 billion euros (10.61 billion U.S. dollars) in May, customs figures showed on Thursday.

For the past 12 months, the cumulated trade deficit widened to 63.41 billion euros in total compared to 51.55 billion euros in 2010.

“As in April, the trade deficit exceeded seven billion euros. It worsened due to double effects of surging imports, notably energy, and of sluggish exports …” French customs said in a statement.

The country’s total imports stood at 41.6 billion, up from 41.47 billion euros reported in April as purchases of refined products remained high and imports of natural hydrocarbons grew.

At the end of May, France reported a slight drop in its sales abroad to 34.17 billion euros on the back of lower sales of Airbus.

The giant aero group garnered 1.33 billion euros after selling 21 aircrafts versus 26 worth 1.7 billion euros in April, but during the week-long Paris Airshow in June, Airbus reported record orders for a total of 730 aircraft worth 72.2 billion U.S. dollars.

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WTO- China Curbs on Raw Material Exports Illegal

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So the WTO controls how a nation prices its exports?

WTO Rules China Curbs on Raw Material Exports Illegal

July 5 (Reuters) — China broke international law when it curbed exports of coveted raw materials, the World Trade Organization ruled Tuesday, in a landmark case threatening Beijing’s defense for similar export brakes on rare earths.

A WTO legal panel dismissed China’s claim that its system of export duties and quotas on raw materials — used in the production of steel, electronics and medicines served to protect its environment and scarce resources.

China struck a defiant note in response to the ruling, which it is expected to appeal.

The WTO said in a statement, “The panel found that China’s export duties were inconsistent with the commitments that China had agreed to in its protocol of accession.”

“The panel also found that export quotas imposed by China on some of the raw materials were inconsistent with WTO rules,” it added.

The ruling hands a victory to the United States, the EU and Mexico, which took China to the WTO in 2009 saying export restrictions on raw materials including coke, bauxite and magnesium discriminated against foreign manufacturers and give an unfair advantage to domestic producers.

It coincides with growing anxiety among markets and policymakers about a trend among resource-rich countries to rein in exports of commodities — from wheat to iron ore — as supplies fall behind global demand.

The WTO issued an unusually stark warning about such export policies last month, saying they risked creating serious shortages.

The case is of particular importance to the EU, whose raw materials purchases from abroad make up 10 percent of its total imports, and which are used in production and manufacturing processes it says employ 30 million Europeans.

‘Significant Victory’

More important than the potential for providing easier access to the eight raw materials in question, the ruling sets a potential precedent in favor of the free circulation of raw materials, particularly of rare earth minerals used to make high-tech goods. China produces 97 percent of the world’s supplies of the crucial industrial inputs, and has begun cutting exports to the dismay of importers.

The United States and EU’s top trade negotiators as well as industry groups said the ruling should serve to pressure China and other states into dropping such restrictions.

U.S. Trade Representative Ron Kirk hailed the “significant victory” on Tuesday, but warned that “China’s extensive use of export restraints for protectionist economic gain is deeply troubling.”

EU Trade Commissioner Karel De Gucht called for a negotiated peace with Beijing to avoid a full-fledged trade war, and vowed to address the issue during a visit to Beijing next week.

But he insisted the EU, United States and Mexico could still opt for legal action if China failed to cooperate.

“What is important about this judgement is that it sets the rules for the future and that it will become an important element in discussions with every country” that restricts raw material exports, De Gucht told Reuters before addressing EU lawmakers in Strasbourg, France.

“What I hope is that we can come to a solution through discussions so we don’t have to litigate anymore,” he said.

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EU trade deficit widened to 2.9 billion euros ($4.1 billion) from 2.2 billion euros

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Note the actual headline and how deep in the article the fact that the trade deficit actually widened is buried.

It’s almost like a US headline that might have reported, for example, the Texas trade surplus grew, when the overall US trade deficit widened and only got a minor mention.

European April Exports Rose on China, Defying Strong Euro

By Gabi Thesing

June 17 (Bloomberg) — European exports rose in April on greater demand from the U.S. and China, shrugging off the effects of a stronger euro.

Exports from the economy of the 17 nations that use the euro rose a seasonally adjusted 0.6 percent from March, when they increased by the same amount, the European Union’s statistics office in Luxembourg said today. Euro-region construction output rose 0.7 percent from the previous month, when it declined 0.1 percent, a separate report showed.

The European Central Bank revised up its growth forecast for this year on June 9, predicting expansion of 1.9 percent after a previous estimate of 1.7 percent on “the ongoing expansion in the world economy.” Even so, the recovery may struggle to maintain momentum as the 15 percent appreciation of the euro against the dollar makes goods manufactured in the euro region more expensive and higher oil prices boost companies’ input prices.

“Exports are particularly driven by Germany, which doesn’t compete solely on price but on highly specialized products,” said Carsten Brzeski, an economist at ING Group in Brussels. “At the same time, the stronger euro will start to bite in the coming months, damping growth, even though it won’t slide back into recession.”

The euro was little changed after the data were released, trading at $1.4168 at 11:03 a.m. in Brussels, down 0.3 percent.

‘Strong Global Demand’

The German economy, the main driver of the European economy, will expand at the fastest pace since the country’s reunification as domestic demand picks up, the RWI economic institute said yesterday.

German carmakers are hiring because of booming demand in China for high-end vehicles. Bayerische Motoren Werke AG Chief Executive Officer Norbert Reithofer said on May 12 that the Munich-based company will hire about 2,000 workers over the course of the year, more than half of them in Germany, “in light of strong global demand for BMW, Mini and Rolls-Royce brand vehicles.”

Euro-area imports rose a seasonally adjusted 1.1 percent in April and the trade deficit widened to 2.9 billion euros ($4.1 billion) from 2.2 billion euros in the previous month, today’s report showed.

Euro-area exports to the U.S. rose 20 percent in the year through March from the year-earlier period, while shipments to the U.K., the euro area’s largest market, increased 14 percent. Exports to China surged 31 percent.

China’s Customs General Administration reported on June 10 that imports from the European Union rose 28.5 percent in April.

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German Exports Surged to Record in March, Boosting Growth

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“The German government predicts economic growth of 2.6 percent this year after a record 3.6 percent expansion in 2010. The country will regain its place as the world’s second- biggest goods exporter in 2011 after being overtaken by the U.S.”

Interesting perspective.

3.6% is pretty low for a record year, and this year looks to be lower than last even with ‘booming exports’

It’s all a sign of low aggregate demand, particularly with the growth of 0 marginal cost infinite leverage output such as software, music, and video which is simply downloaded. There is no ‘speed limit’ for that kind of thing, so directed accordingly, non inflationary GDP can grow at any rate.

German Exports Surged to Record in March, Boosting Growth

By Jana Randow

May 9 (Bloomberg) — German exports surged in March to the highest monthly value ever recorded, boosting growth in Europe’s largest economy.

Exports, adjusted for work days and seasonal changes, jumped 7.3 percent from February, when they gained 2.8 percent, the Federal Statistics Office in Wiesbaden said today. Economists had forecast a 1.1 percent increase, according to the median of 10 estimates in a Bloomberg News survey. Exports were worth 98.3 billion euros ($141.4 billion) in March, the most since records began in 1950, the statistics office said.

Germany’s economic recovery is broadening as companies boost investment and hiring to meet booming export demand from emerging Asia. The economy may have expanded as much as 1 percent in the first three months of the year and may maintain its growth momentum in the current quarter, according to the Bundesbank.

“The German economy continues to power ahead,” said Holger Schmieding, chief economist at Berenberg Bank in London. “After a very strong start to 2011, Germany may lose a little steam over the summer.”

The euro rose almost half a cent after the report to $1.4424 at 8:16 a.m. in Frankfurt.

Record Imports

From a year earlier, exports rose 15.8 percent, today’s report showed. Imports advanced 16.9 percent in the year and 3.1 percent from February. Worth 79.4 billion euros in March, imports also reached a record monthly value.

The trade balance widened to 18.9 billion euros from 11.9 billion euros in February. The surplus in the current account, a measure of all trade including services, was 19.5 billion euros in March, up from 8.7 billion euros in February.

Germany’s BASF SE, the world’s biggest chemical company, reported a 40 percent jump in first-quarter earnings last week and Siemens AG, Europe’s largest engineering company, said profit this year will rise at least 75 percent.

The German government predicts economic growth of 2.6 percent this year after a record 3.6 percent expansion in 2010.

The country will regain its place as the world’s second- biggest goods exporter in 2011 after being overtaken by the U.S. last year due to exchange-rate movements, the Ifo economic institute said on April 19.

“In times of investment catching up in the emerging world, infrastructure renewals in the western world and a general shift of energy policies toward alternative and renewable energies, German industry simply offers the right mix,” said Carsten Brzeski, senior economist at ING Group in Brussels.

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