December was a strong month for US factory orders. Reuters reports:
New orders for U.S.-made durable goods rose a larger-than-expected 1.3 percent in December and the previous month was revised higher, while non-transportation orders gained 0.9 percent, Commerce Department data showed...
November orders were revised up to show a 5.4 increase, the largest monthly gain since May 2005, from a previously reported 4.4 percent advance.
For 2005 as a whole, orders increased 8.2 percent, slightly below 2004's 10 percent gain. The annual increase in non-transportation goods orders was also 8.2 percent.
Non-defense capital goods orders excluding aircraft, seen as a proxy for business spending, were up 3.5 percent, the strongest gain since August. In addition, November's number was revised up to show a 0.2 percent gain from a previously reported 2.1 percent decline.
The strength in the US economy is being reflected in employment too.
The Labor Department said initial claims for state jobless aid rose 11,000 in the week ended January 21 to 283,000 from an upwardly revised 272,000 the prior week...
The four-week moving average of initial claims, which smooths weekly volatility for a more reliable indication of underlying employment trends, fell 10,750 to 288,750, the lowest level since July 2000.
In contrast, industrial output in South Korea fell by 2.6 percent in December, while in Singapore, manufacturing output fell 2.5 percent in December.
Elsewhere in Asia, Japan provided more signs that its economy is improving. From Bloomberg:
Japan's consumer prices had the first back-to-back gain since April 1998 and retail sales rose, signaling that the world's second-biggest economy may be emerging from more than seven years of deflation.
Core prices, which exclude fresh food, climbed 0.1 percent in December from a year earlier, after increasing by the same amount in November, the statistics bureau said today in Tokyo. Retail sales rose a seasonally adjusted 0.8 percent from November, the Ministry of Economy, Trade and Industry said.
Despite the December data, Morgan Stanley economists remain sanguine about the prospects for South Korea and Singapore.
On the other hand, Andy Xie is skeptical about the prospects for Japan.
Japan has a declining population and does not have a big output gap. It is irrational, I believe, to expect a big growth boom in Japan.
Xie's other forecasts:
[U]nskilled labour in OECD countries has increased debt to sustain consumption, even as globalisation has decreased earnings. The surging credit problems in this segment mark the end of this debt-led cover-up of the income problems in the OECD economies, in my view.
[P]roperty prices have peaked in most markets. While the price declines may not be sufficient to trigger a recession, they will no longer be able to boost growth as before. The growth disappointment could expose financial distress and trigger the risk reduction trade.
[T]he commodity bubble and China's surging overcapacity are clashing. The surge in China's fixed asset investment from US$445 bn to US$1 trillion between 2001 and 2005 fuelled commodity demand. However, China will need to slow down investment as overcapacity causes product prices to decline. I expect the commodity bubble to burst in 2006 due to weak demand.
Even in the event that enthusiasm over the 'long-term' value of the hard commodities sustains the bubble, the resulting inflationary pressure could cause the Fed to tighten more and longer than the market expects. In this case, the resulting liquidity decline could burst the bubble.