Signs of slowdown in global economy

The signs that the global economy is slowing are getting clearer.

On Thursday, the US Labor Department announced that the producer price index (PPI) fell 0.3 percent in June. Core producer prices, which excludes food and energy, gained 0.2 percent.

On Friday, the US Labor Department announced that the consumer price index (CPI) rose 0.3 percent in June. The core CPI, which excludes food and energy, edged up 0.1 percent.

The PPI and CPI had risen 0.8 percent and 0.6 percent respectively in May. So the latest figures indicate a slowdown.

A slowdown is definitely taking place in China. On Friday, the National Bureau of Statistics reported that the Chinese economy grew by 9.6 percent in the second quarter from a year earlier. While only slightly lower than the first quarter's growth rate of 9.8 percent, the low base represented by the previous year's SARS-hit second quarter suggests that quarter-on-quarter GDP change may have been negative.

Similarly, China's consumer price index in June was up 5 percent from a year earlier. However, Guotai Junan Securities economist Zhou Keyu noted that that implied that the CPI fell by 0.7 percent from the month before.

Together with the weak US jobs data for June and the negative sentiment surrounding the technology sector recently, it all adds up to a slowing global economy.