Saturday, 12 May 2007

Chinese data look hot, US data do not

China's trade surplus shows few signs of narrowing. From Xinhua Online:

China's trade surplus in April more than doubled the figure of March to 16.88 billion U.S. dollars, though the country's exports grew slower and imports rose faster over the past month, according to the General Administration of Customs...

The administration said the aggregate surplus for the first four months has reached 63.31 billion U.S. dollars, with the April exports growing at a slower 26.8 percent to 97.45 billion U.S. dollars and imports, at a faster 21.3 percent to 80.57 billion U.S. dollars.

But things could change in a few years' time. From China Daily:

The supply of low-cost labor, widely considered to be fueling China's sizzling economy, could start drying up as early as 2010, a report warns.

One of the biggest reasons for the potential shortage is that the rural labor force may not be as large as previously thought, the report, issued by the Chinese Academy of Social Sciences on Thursday, says.

"China is moving from an era of labor surplus into an era of labor shortage," the report cautions.

As it is, China's boom is already putting upward pressure on producer prices. From Bloomberg:

China's producer prices climbed at a faster pace in April.

Factory-gate prices rose 2.9 percent from a year earlier, the National Bureau of Statistics said today, after gaining 2.7 percent in March. That's the same as the median estimate of 14 economists surveyed by Bloomberg News.

Little wonder that the People's Bank of China said it would keep tightening in its first quarter monetary policy report.

In contrast, markets are looking for interest rate cuts in the US, especially after yesterday's data. From Reuters:

A Commerce Department report on Friday showed sales by U.S. retailers fell 0.2 percent to a seasonally adjusted $372.03 billion last month, hurt by a one-two punch of soaring gasoline prices and a slumping housing market.

Separately, the Labor Department said that while costlier energy pushed producer prices up 0.7 percent in April, the so-called core rate that strips out food and energy costs was unchanged from March.

"Bottom line, today's data reinforces the view that inflation is contained while the economy is showing signs of a slowdown," said Alex Beuzelin, an analyst with Ruesch International in Washington.

"It also supports the view that the Fed will have to cut rates sometime this year," he added.

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