Tuesday, 28 June 2005

German outlook improves, industrial production down in Taiwan and Singapore

German business confidence rebounded in June after four consecutive months of falls. The Ifo institute said yesterday that its business climate index has risen from 92.9 in May to 93.3 this month.

Hans-Werner Sinn, Ifo president, said that businesses assessed their current situation as "slightly better" while expectations for the coming six months had "clearly improved". The pick-up was particularly marked among wholesalers and retailers, pointing to a possible revival in domestic demand. But Mr Sinn warned that the latest results "do not yet suffice to indicate an economic recovery in the coming months".

Prospects are a little less optimistic in the UK after Hometrack reported that the average home price dropped by 0.2 per cent between May and June, the 12th monthly decline in a row.

In Asia, industrial production outside China continues to be weak.

In Taiwan, industrial production in May fell 1.42 percent over the same month last year while manufacturing production fell 1.4 percent. Export orders received by Taiwan manufacturers in May reached US$19.52 billion, an increase of 13.14 percent over the same month last year, but the growth rate is slower than in previous months.

In Singapore, manufacturing output fell 4.8 percent in May on a seasonally-adjusted basis, pulled down mainly by biomedical manufacturing.

Apart from the unusually optimistic Ifo figure -- which many attribute to a weakened euro -- the above pieces of news are consistent with the recent pattern of slowing global economic growth. Let's see whether the data coming out the rest of this week confirms this pattern or not.

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