Friday, 26 January 2007

China's rapid growth continues

If China's economy is supposed to be slowing, it is not very apparent. AFP/CNA reports:

China's economy expanded by 10.7 percent in 2006, according to the government, reporting growth not seen for over a decade and putting it on track to become the world's third biggest next year...

The growth rate was also slightly higher than the 10.5 percent that officials had indicated in recent weeks...

Fixed asset investment, the main indicator of state-funded spending on new productive capacity, rose 24 percent last year, fuelled by the ample liquidity available in the Chinese economy.

Industrial output expanded 12.5 percent, boosted by massive investment in new plant and equipment in recent years, and booming exports.

Retail sales, a main gauge of consumer spending and sentiment, increased 13.7 percent in 2006, while consumer price inflation remained moderate at just 1.5 percent.

However, the consumer price index appeared to spike in December, rising 2.8 percent compared with the same month a year earlier.

The National Bureau of Statistics confirmed in its briefing Thursday that China's trade surplus reached a record 177.5 billion dollars in 2006, up 74 percent from 2005.

With its rapid growth, China's economy could overtake Germany's soon, especially if the latest turn in sentiment indicators in the latter are the start of a trend. The Ifo business sentiment index fell to 107.9 in January from 108.7 in December while GfK AG's consumer confidence index for February dropped to a 12-month low of 4.8 from a revised 8.5 this month.

But Germany at least has a trade surplus, helping the overall eurozone current account which, nevertheless, slipped into a deficit of 2 billion euros in November after a revised surplus of 1.8 billion euros in October.

One country that does not have problems with deficits on the trade front is Japan. Bloomberg reports:

Japan's trade surplus widened in December after a drop in oil prices cut the country's import bill and exports rose to a record, supporting growth in the world's second-largest economy.

The trade surplus rose 22.8 percent to 1.11 trillion yen ($9.2 billion), the Ministry of Finance said in Tokyo today. Imports rose 7.6 percent and exports climbed 9.8 percent. The result was in line with economists' expectations.

There was also continuation of recent trends in the US in yesterday's data in the form of a weak housing but a resilient labour market. Reuters reports:

Sales of previously owned U.S. homes slipped 0.8 percent in December and took their biggest tumble in 17 years for all of 2006, leaving in doubt whether the worst of a housing slump has passed...

But the monthly report on sales of so-called existing homes...also contained some encouraging news since inventories of unsold homes were down 7.9 percent to 3.508 million units at the end of December.

In addition, the median price of homes sold in December was up to $222,000 from $217,000 in November...

The Labor Department said new claims for U.S. jobless aid jumped 36,000 last week to 325,000 -- still a relatively modest number of applicants, especially when there are lingering issues with seasonal adjustments stemming from the year-end holiday season...

A third report from the New York-based Conference Board said help-wanted ads in U.S. newspapers rose in December. Its gauge measuring help-wanted ad volume in the United States rose to 33 in December from a revised 29 in November.

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