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Posts Tagged ‘slows’

US growth slows fueling fears over recovery

In Uncategorized on July 31, 2010 at 11:18 am

US economic growth slowed dramatically in the second quarter, the government has said, stoking fears that the recovery is losing steam and fueling a fierce political debate over how to respond.


Gross domestic product (GDP) growth fell back sharply to 2.4 percent in the second quarter, the Commerce Department said, slamming the brakes on an already tepid rebound and painting a bleak picture of the road ahead.


“The post-recession rebound is history,” said Bart van Ark, chief economist for The Conference Board, a leading business research group.


In the first quarter, growth hit 3.7 percent, up substantially from the 2.7 percent previously reported by government.


Amid weak consumer spending and a widening trade gap, few took solace from fresh data that appeared to confirm the US recession has ended and only marginally failed to meet analysts’ expectations of 2.5 percent growth.


President Barack Obama admitted more work needs to be done, but stressed the economy was on the right path, pointing to four consecutive quarters of growth.


“Our economy is growing again instead of shrinking. And that’s a welcome sign compared to where we were,” he said in Detroit.


“But we’ve got to keep on increasing that rate of growth and keep adding jobs so we can keep moving forward,” he said.


Revisions to previous GDP data Friday showed the recession was much worse than previously thought, with negative growth reaching a whopping 6.8 percent in the final three months of 2008.


“The fourth quarter of 2008 and first quarter of 2009 had the worst two quarterly declines in 51 years,” said Beth Ann Bovino, a senior economist Standard & Poor’s.


Detailed figures for the April-to-June period showed much of the slowdown came from businesses reining in inventory spending, which had grown rapidly in the wake of the financial crisis.


Increased imports — which are subtracted from the GDP figure, as that money flows abroad — also played a strong role.


Americans bought more, but that spending was tilted toward foreign goods and services.


“Purchases by US residents of goods and services wherever produced — increased 5.1 percent in the second quarter, compared with an increase of 3.9 percent in the first,” the Commerce Department said.


“Imports of goods and services increased 28.8 percent, compared with an increase of 11.2 percent,” in the first quarter, it said.


Friday’s data fueled a fierce debate about whether the government needs to again jump start the economy, and how best that could be done.


Obama has clashed with Republicans over the need for government to help the ailing economy, making spending one of the most fiercely fought political battles in the US capital.


Obama’s critics accuse the president of putting Americans’ future at risk by causing US debt to balloon through ineffective stimulus spending.

In Detroit, Obama touted a 64-billion-dollar bailout that kept the Motor City’s automakers afloat, promoting it as the type of “tough decision” needed to avoid economic depression.

The White House claims one million auto jobs were saved by Obama’s actions, and GM and Chrysler have returned to profit.

Businesses offered a possible bright spot in the Commerce Department’s report, as their investment increased 17 percent in the second quarter, compared with an increase of 7.8 percent in the first.

Shoppers and pedestrians walk past an extrance to Macy’s Department Store in New York.

“Business investment was up substantially,” said Stephen Gallagher of Societe Generale, sounding a note of caution.

“Stronger profits are behind the business investment, but unfortunately, these profits are not sparking as much employment growth.”

According to economist Peter Morici, American consumers will have to start spending again if the recovery is to gain traction.

“Unless spending picks up… once businesses stop piling up unsold goods, layoffs will outnumber hires, unemployment will rise with a vengeance, and the economy will head into a second dip.”

Source: SGGP

China’s economic growth slows in second quarter

In Uncategorized on July 15, 2010 at 12:55 pm

China said Thursday its economic growth slowed in the second quarter, as massive stimulus spending was scaled back and moves to rein in soaring property prices started to bite.


Gross domestic product in the world’s third-largest economy maintained double-digit growth for the third quarter in a row, expanding 10.3 percent in the three months to June, according to the National Bureau of Statistics.


The latest figures add to mounting evidence that the Chinese economy is losing steam, although Beijing has so far shown no intention of reversing tightening policies, and analysts downplayed the risk of a sharp slowdown.


“Generally speaking, the economy is running well,” NBS spokesman Sheng Laiyun told reporters.


Sheng said the moderate slowdown in growth in the second quarter would “help prevent the economy… from overheating,” but added: “There are still a lot of difficulties and problems in the course of economic recovery.”


The second quarter figure marked a slowdown from the blistering 11.9 percent growth in January-March and the 10.7 percent in the last three months of 2009, after Beijing introduced a range of measures to cool the red-hot economy.


The economy grew 11.1 percent in the first half of 2010 compared with the same period a year earlier, the data showed.


Analysts said economic growth was expected to slip to single digits in the second half, but dismissed the idea of any serious troubles in the short term.


“Despite the slowing growth, we think the chance for double-dip in China is quite small as China?s pragmatic policymakers are quite flexible on policy stance,” said Lu Ting, an economist at Bank of America-Merrill Lynch.


“They still have a deep pocket to buffer any big slowdown.”


The closely watched consumer price index, the main gauge of inflation, rose 2.9 percent on-year in June alone, compared with 3.1 percent in the previous month, the statistics bureau said.


The slowdown in inflation added to mounting evidence that the government’s measures to avert economic overheating were kicking in.


Inflation was up 2.6 percent in the first half of 2010 from a year earlier.


Morgan Stanley economist Wang Qing said there was a “high probability” the government would increase its 7.5 trillion yuan (1.1 trillion dollars) bank lending target for this year as inflation continues to ease.


“In light of receding inflationary pressures, the policy stance in the second half will likely demonstrate an easing bias,” said Wang.


China’s fixed asset investment in urban areas, a measure of government spending on infrastructure and a key driver of the economy, rose 25.5 percent in the first half from the same period last year, the government said.


Industrial output from the country’s millions of factories and workshops increased 17.6 percent on year in the six-month period.


Retail sales, a key measure of consumer spending, rose 18.2 percent in the first half of 2010 from a year ago.

Recent data also showed bank lending, real estate prices and imports all slowed in June from the previous month, while surveys of purchasing managers at factories across China showed manufacturing activity eased last month.

Beijing has shown no intention of altering its policy tightening stance despite signs the economy is running out of puff, and has begun to rein in the huge stimulus spending put in place in the wake of the global financial crisis.

Chinese workers perch on scaffolding at a construction site in Hefei, central China’s Anhui province.

In recent weeks, China also has loosened its grip on the yuan exchange rate by allowing the currency to trade more freely against the dollar, while export tax rebates on some products have been removed.

“It’s more of a wait-and-see attitude from Beijing’s leaders,” said Ken Peng, a Beijing-based economist for Citigroup.

Chinese Premier Wen Jiabao said last month he believed the economy was moving in the “expected direction”, which was interpreted as a sign that the government planned to stick to current policies.

Wen’s comments came after President Hu Jintao, in a speech to the Group of 20 summit in Canada, called for caution in exit strategies from economic stimulus programmes to safeguard the global recovery.

Source: SGGP

China’s manufacturing activity slows in April: HSBC

In Uncategorized on May 4, 2010 at 8:39 am

China’s manufacturing activity slowed in April, suggesting government measures aimed at reining in the world’s third-largest economy were bearing fruit, an independent survey showed Tuesday.


The HSBC China Manufacturing PMI, or purchasing managers index, fell to 55.4 in April from 57.0 in March.


The April figure marked the 13th straight month of expansion but was the lowest reading in six months, the bank said. A reading above 50 means the sector is expanding, while below 50 indicates an overall decline.


“April’s PMI points to a moderate slowdown in the expansion of manufacturing activity,” said HSBC chief economist Qu Hongbin.


“We see this as good news because it means that Beijing’s policy tightening is starting to cool the overheated economy, which will help to contain inflationary risk in the coming quarters.”


A separate survey released by a government agency on Saturday showed manufacturing activity had accelerated to 55.7 in April from 55.1 in March.


HSBC’s results are based on interviews with purchasing managers at more than 400 companies, while the survey by the China Federation of Logistics and Purchasing covers more than 700 firms.


Both surveys showed a sharp increase in input prices, reflecting higher costs for raw materials such as copper, cotton, oil and steel.


“Average input costs faced by Chinese manufacturing firms rose for the tenth successive month in April, increasing at a considerable rate that was the fastest in three months,” HSBC said.


The Chinese government agency warned that pressure on production costs was expected to “increase significantly” in the coming months and could fuel inflationary pressures.


“We need to pay close attention to the difficulties that companies are facing,” government analyst Zhang Liqun said in a commentary released with the data.


On Sunday, Beijing announced fresh measures to rein in bank lending to calm inflationary pressures and avoid a damaging bubble in the real estate market.


China’s economy grew by a blistering 11.9 percent in the first quarter of 2010, fuelling fears the booming economy was at risk of overheating.


 

Source: SGGP