Macroeconomic News

11.12.2011 16:32 Japan`s economy grew an annualized 5.6 percent on quarter in the July-September period Japan`s economy grew an annualized 5.6 percent on quarter in the July-September period, downwardly revised from a preliminary expansion of six percent, the Cabinet Office said. On an inflation-adjusted basis gross domestic product (GDP) equates to a revised 1.4 percent increase from the previous quarter, down from a preliminary 1.5 percent increase, but higher than median economists` forecasts for a revised 1.3 percent expansion, the office said. The downward revision was largely expected by economists following the government stating recently it was lowering its capital spending estimate, a key factor in calculating gross domestic product. Capital spending was revised downward to a 0.4 percent quarter - on-quarter decline, from a preliminary 1.1 percent rise, the government`s latest figures showed. In addition the cabinet office said that private consumption was downwardly revised to a 0.7 percent increase on quarter, from a preliminary one percent rise. Capital investment by Japanese non-financial companies slumped 9.8 percent in the reporting quarter and on a seasonally adjusted basis, capex, excluding spending on software, declined 2.7 percent to mark a fourth straight quarterly drop, following a 6.3 recent in the previous quarter, the cabinet office said. Japan`s third-quarter economic expansion was its first growth in four quarters and came after the earthquake and tsunami disaster in March. According to the latest figures from the finance ministry, Japanese companies cut capital spending by 9.8 percent from a year earlier in the three months ended Sept. 30, marking the second quarter of retraction and the cabinet office noted that in October Machinery orders, a key indicator of future capital spending, decreased 6.9 percent from the previous month.

Economists expect Japan`s economy to contract in the next quarter as the rebound loses momentum, weighed down by the nation` s persistently strong yen that has forced some firms to move manufacturing operations from Japan to more economically viable countries and seen firms` overseas profits eroded on unfavorable exchange rates and stripped companies here of their competitiveness in global markets. 02.12.2011 12:38 The International Monetary Fund said it would probably lower its global economic growth The International Monetary Fund said on Dec 01th that it would probably lower its global economic growth, but did not expect a double-dip recession in the United States. "We will likely be revising downwards our forecast," IMF spokesman Gerry Rice said at a regularly scheduled news briefing, refusing to give further details. There has been a sharp slowdown, particularly in Europe, and financial market turmoil has clouded forecasting since the IMF`s World Economic Outlook report was issued in October, he said.

"The global recovery remains unbalanced and bumpy. Since that WEO there has been a marked slowdown in economic activity, especially as we all known, in Europe. The turmoil in the financial market is also contributing to further uncertainty about the economic forecast. WEO updates will be issued "toward the end" of January, he added. Asked whether the IMF sees the United States, where economic growth has been sluggish, falling back into recession, Rice said: "Our forecast is not for a double-dip recession." He also said the IMF has received no requests for short-term credit lines amid the current slowdown. 25.11.2011 18:34 US GDP grew at 2.0 percent in Q3 2011 compared with earlier estimations of 2.5 percent The US Commerce Department said that during the third quarter, the country`s gross domestic product (GDP) grew at 2 percent, compared with earlier estimations of 2.5 percent, reported Khaleej Times. The department added that the rate of growth recorded in the period was higher than second quarter`s 1.3 percent pace, a period which was affected by high gasoline prices that hampered spending, in addition to the consequences of Japan`s earthquake and tsunami which restrained auto output. It also said that during the third quarter, business inventories declined by USD8.5 billion, which trimmed 1.55 percentage points from GDP growth, on the other hand, consumer spending during the period was revised slightly down to a 2.3 percent growth pace due to adjustments to motor vehicle fuels and lubricants.

It is worth noting that during the fourth quarter, pace of economic growth might surpass 3 percent, recording the fastest pace in eighteen months. 16.11.2011 13:49 Eurozone GDP grew by 0.2% quarter-on-quarter in the third quarter of 2011 Eurozone GDP grew by 0.2% quarter-on-quarter (q/q) in the third quarter – driven by a rebound in activity in Germany and France. The figure matched the 0.2% seen in the second quarter and compares with a 0.5% rise in UK output in the third quarter. However, it remains down sharply on the 0.8% growth the eurozone posted in the first quarter and experts are still predicting an overall contraction in the fourth quarter. Compared with the same quarter of the previous year, eurozone GDP increased by 1.4% despite increasing fears over sovereign debt in the 17 nation euro area. Germany`s GDP rose 0.5% q/q and France`s at a rate 0.4%q/q. At the other end of the scale Greek output fell 5.2% in the third quarter compared to the year before. Quarter-on-uarter figures were not available. Germany`s said it growth was driven by consumer spending, despite the figure coming as the ZEW economic sentiment index for Germany showed its lowest reading since August 2008 on worries over the state of Greece and Italy. Cyprus, the Netherlands and Portugal all posted falls in GDP compared to the second quarter.

Growth of Eurozone`s GDP from July to September was the same as in the second quarter, but the outlook for the last three months of 2011 is dim, with the region`s deepening debt crisis weighing on sentiment and consumer confidence. The European Commission expects the economy of the 17 countries using the euro to shrink 0.1 percent in the last three months of the year against the third quarter and to stagnate in the first quarter of 2012. 09.11.2011 11:10 German industrial production declines sharply by 2.7% in September 2011 Government data show that industrial production in Germany fell by a sharper-than-expected 2.7 percent on the month in September - adding to signs that growth is sagging in Europe`s biggest economy. Economists had expected a smaller drop of 0.9 percent. However, the Economy Ministry said that the drop was exaggerated by the effect of public holidays and the previous month`s figure was revised upward.

It now says production dipped by 0.4 percent in August rather than the 1 percent initially reported. Over the whole of the third quarter, industrial production rose 1.7 percent compared with the previous three months. The production figures come after the Economy Ministry said that industrial orders fell 4.3 percent in September. 02.11.2011 11:26 The European Debt Crisis Demonstrated Again Its Chokehold on Global Markets The European debt crisis demonstrated again on November 1th the chokehold it maintains on investors worldwide, as a surprise move by Greece to put the terms of its planned bailout to a public referendum battered global financial markets. Declines that started in Asia accelerated in Europe — where the major indexes slumped 5 percent. Bank stocks led the sell-offs, and the broad United States stock market slid nearly 3 percent.

In the credit markets, crucial stress gauges moved toward recent highs, while rising interest rates on Italian debt underscored investors` growing doubts about that highly indebted country, which has become the new focus of concern in the euro zone. The Greek referendum threatened to undo the work of the summit meeting last week in Brussels, where leaders outlined a rescue plan that cheered markets and contributed to the biggest monthly United States stock market rally in October since 1982. 23.10.2011 12:30 Industrial production increased 0.2 percent in September after having been unchanged in August Industrial production increased 0.2 percent in September after having been unchanged in August. Previously, industrial production was reported to have stepped up 0.2 percent in August. For the third quarter as a whole, industrial production rose at an annual rate of 5.1 percent. Manufacturing output moved up 0.4 percent in September after having gained 0.3 percent in August.

Production at mines advanced 0.8 percent in September, while the output of utilities decreased 1.8 percent. At 94.2 percent of its 2007 average, total industrial production for September was 3.2 percent above its year-earlier level. Capacity utilization for total industry edged up to 77.4 percent, a rate 1.7 percentage points above its level from a year earlier but 3.0 percentage points below its long-run (1972-2010) average. 13.10.2011 22:30 Industrial production up by 1.2% in euro area in August 2011 In August 2011 compared with July 2011, seasonally adjusted industrial production rose by 1.2% in the euro area (EA17) and by 0.9% in the EU27. In July production grew by 1.1% and 0.9% respectively. In August 2011 compared with August 2010, industrial production increased by 5.3% in the euro area and by 4.3% in the EU27. These estimates are released by Eurostat, the statistical office of the European Union.

In August 2011 compared with July 2011, production of capital goods grew by 2.1% in the euro area and by 1.6% in the EU27. Intermediate goods rose by 1.7% and 1.4% respectively. Non-durable consumer goods increased by 1.1% in the euro-area and by 0.7% in the EU27. Production of energy remained stable in the euro area and gained 0.3% in the EU27. Durable consumer goods remained stable in both zones. Among the Member States for which data are available, industrial production rose in twelve and fell in ten. The largest increases were registered in Portugal (+8.2%), Ireland (+4.4%) and Italy (+4.3%), and the highest decreases in Denmark (-3.0%), Sweden (-2.7%) and Bulgaria (-2.1%). In August 2011 compared with August 2010, production of capital goods increased by 12.2% in the euro area and by 10.6% in the EU27.

Intermediate goods rose by 5.3% and 4.7% respectively. Durable consumer goods grew by 2.8% in the euro-area and by 1.1% in the EU27. Non-durable consumer goods gained 1.9% and 1.8% respectively. Production of energy fell by 3.5% in the euro area and by 3.6% in the EU27. Among the Member States for which data are available, industrial production rose in seventeen and fell in five. The highest increases were registered in Estonia (+22.7%), Ireland (+10.1%), Germany (+7.8%) and Romania (+7.7%), and the largest decreases in Greece (-12.3%) and Malta (-2.2%). 02.10.2011 10:45 The U. S. economy grew slightly more than previously reported in the Q2 2011 The U. S. economy grew slightly more than previously reported in the second quarter, helped by consumer spending and export growth that was stronger than earlier estimated, according to a government report on Thursday that pointed to slow growth rather than a recession.

Gross domestic product grew at annual rate of 1.3 percent, the Commerce Department said in its third and final estimate for the quarter, up from the previously estimated 1.0 percent. The revision was a touch above economists` expectations for a 1.2 percent pace and took GDP growth back to the government`s original estimate of 1.3 percent. The economy expanded at a 0.4 percent rate in the first three months of the year. While the expenditure side of the economy showed severe weakness in the first half, economic activity as measured by income fared a little better. Gross domestic income rose at a 1.3 percent rate in the second quarter after increasing 2.4 percent in the first quarter. The report also showed after-tax corporate profits rising at a 4.3 percent rate in the second quarter, the largest increase in a year, instead of 4.1 percent. Profit ticked up 0.1 percent in the first quarter. Consumer spending growth was revised up to a 0.7 percent rate from 0.4 percent. The increase in spending, which accounts for more than two-thirds of U. S. economic activity, was still the smallest since the fourth quarter of 2009.

Export growth was stronger than previously estimated, rising at a 3.6 percent rate instead of 3.1 percent. Imports increased at a 1.4 percent rate rather than 1.9 percent. That left a smaller trade deficit, and trade contributed 0.24 percentage point to GDP growth. Businesses accumulated less stock than previously estimated in the quarter, which should support growth in the July-September quarter. Business inventories increased $39.1 billion instead of $40.6 billion, cutting 0.28 percentage point from GDP growth during the quarter. Excluding inventories, the economy grew at a 1.6 percent pace instead of 1.2 percent.

Business spending was revised to a 10.3 percent rate from 9.9 percent rate as investment in nonresidential structures offset a slight slowdown in outlays in equipment and software. Spending on nonresidential structures was the fastest since the third quarter of 2007. The GDP report also showed inflation pressures remaining elevated during the quarter, with the personal consumption expenditures price index rising at a revised 3.3 percent rate. That compared to 3.9 percent in the first quarter. The core PCE index closely watched by the Federal Reserve advanced at a 2.3 percent rate, the largest increase since the second quarter of 2008. It was revised up from 2.2 percent. 27.09.2011 16:52 The World Trade Organization cut its 2011 trade growth forecast The World Trade Organization cut its 2011 trade growth forecast to 5.8 percent from 6.5 percent as earlier predicted, amid increasing economic uncertainty on Sept 23th. "Members must remain vigilant.

This is not the time for go-it-alone measures. This is the time to strengthen and preserve the global trading system so that it keeps performing this vital function in the future," warned Pascal Lamy, director-general of the WTO, in a statement. Trade volumes in developed economies are now projected to grow by 3.7 percent for 2011, as opposed to the 4.5 percent predicted in April. For developing economies, full year trade growth is expected to reach 8.5 percent, down from the earlier forecast of 9.5 percent. WTO economists said that since their previous forecast, "developed economies in particular have been buffeted by strong headwinds, including the lingering effects of the earthquake and tsunami in Japan, the prolonged budget impasse and credit downgrade in the United States, and the ongoing euro area sovereign debt crisis." Poor output and employment data have also hammered consumer confidence and contributed to the turmoil in the financial markets. German exports have recently "turned ominously downward" with year-on-year growth falling from 36 percent in May to 16 percent in July.

Likewise in France, export growth tumbled from 44 percent in May to 9 percent in July. Strong growth in China and other emerging economies are currently helping to buffer the overall slowdown. But the economists warned that the current forecast still carries "an unusually high degree of uncertainty" as it is made on the assumption that trade would slow down instead of declining drastically. On the upside, the economy may see a pick up in growth if policymakers are able to find credible solutions to the debt crisis. "On the other hand, policy missteps could trigger wider instability along the lines of the crisis that followed the failure of Lehman Brothers in 2008," the WTO said. "Weighing these factors, we believe that risks to the forecast are firmly rooted on the downside but we should not ignore the fact that there is some upside potential," it warned.

The WTO noted that member states resisted protectionist pressures during the financial and economic crises of 2008 to 2009, but another sharp downturn could test their will. "Another downturn in the global economy could strain their resolve to the breaking point and trigger a descent into self-destructive protectionism," the trade body feared. Global trade expanded by a record-breaking 14.5 percent in 2010, making up some ground lost in 2009`s slump of 12 percent.