BBC NEWS | 2009/11/18 | 14:21:13 GMT
The construction of new homes and apartments in the US showed a surprise fall in October. New US housing starts tumbled 10.6% to an annual rate of 529,000 homes – the lowest level since April. The decline in construction was led by a fall in demand for both single-family and multi-family occupancies. Separately, a report showed prices edging up in October. The consumer price index rose 0.3%, pushed up by higher energy prices.
‘A weak number’
The housing figures are a blow to recent signs of recovery in the market. David Resler from Nomura Securities in New York said they were “really disappointing.” “I had convinced myself that we had turned the corner on housing,” he added. “I am no longer convinced. This is really a quite weak number.” Congress has voted to extend a tax credit of up to $8,000 for first-time buyers. It had been due to expire at the end of November. Some analysts said that the uncertainty over whether it would be renewed could have held back construction. Continue reading
ABC NEWS Business Unit | Nov. 18, 2009
The Wall Street firm that has arguably taken the most heat for its multibillion-dollar employee compensation will donate $500 million for a new program to help small businesses. Goldman Sachs, widely viewed as the biggest bank to suffer the least damage from the world’s financial crisis, said Tuesday it will join forces with billionaire investor and Goldman stakeholder Warren Buffett on “10,000 Small Businesses.” The program will provide capital to small businesses in underserved areas and education aid to small business owners. “Small businesses play a vital role in creating jobs and growth in America’s economy,” Goldman CEO Lloyd C. Blankfein said in a statement released Tuesday. “We are pleased to work with our partners in this initiative to support small business owners, particularly those in underserved communities.”
Goldman Sachs, which received and later paid back $10 billion in federal Troubled Asset Relief Program funds during the financial crisis, has set aside $16.7 billion for employee compensation so far this year and is on track to pay out an average $700,000 per employee. The $500 million program amounts to less than 3 percent of Goldman’s employee compensation pool. There’s been rampant speculation that the bank Continue reading
PAUL KRUGMAN | NYT | November 16, 2009
International travel by world leaders is mainly about making symbolic gestures. Nobody expects President Obama to come back from China with major new agreements, on economic policy or anything else. But let’s hope that when the cameras aren’t rolling Mr. Obama and his hosts engage in some frank talk about currency policy. For the problem of international trade imbalances is about to get substantially worse. And there’s a potentially ugly confrontation looming unless China mends its ways. Some background: Most of the world’s major currencies “float” against one another. That is, their relative values move up or down depending on market forces. That doesn’t necessarily mean that governments pursue pure hands-off policies: countries sometimes limit capital outflows when there’s a run on their currency (as Iceland did last year) or take steps to discourage hot-money inflows when they fear that speculators love their economies not wisely but too well (which is what Brazil is doing right now). But these days most nations try to keep the value of their currency in line with long-term economic fundamentals.
China is the great exception. Despite huge trade surpluses and the desire of many investors to buy into this fast-growing economy — forces that should have strengthened the renminbi, China’s currency — Chinese authorities have kept that currency persistently weak. They’ve done this mainly by trading renminbi for dollars, which they have accumulated in vast quantities. And in recent months, China has carried out what amounts to a beggar-thy-neighbor devaluation, keeping the yuan-dollar exchange rate fixed even as the dollar has fallen sharply against other major currencies. This has given Chinese exporters a growing competitive advantage over their rivals, especially producers in other Continue reading
Reuters | 15 Nov 2009 | 9:48 PM ET
A stronger Chinese Yuan is part of the reforms that Beijing needs to implement to increase domestic consumption and help ease global imbalances, the head of the International Monetary Fund said on Monday. IMF Managing Director Dominique Strauss-Kahn said the countries at the heart of global imbalances needed to take various measures to ease them. In the case of China, that means an increasing emphasis on domestic demand, especially private consumption, Strauss-Kahn said in remarks prepared for a financial conference in Beijing. “A stronger currency is part of the package of necessary reforms,” he said. “Allowing the renminbi (Yuan) and other Asian currencies to rise would help increase the purchasing power of households, raise the labour share of income and provide the right incentives to reorient investment.” His remarks come as U.S. President Barack Obama is in Shanghai on the first leg of a four-day visit that will grapple with economic imbalances and the future of the Yuan. Strauss-Kahn noted that Chinese authorities were already taking steps to boost household consumption, including health care reforms. “But more can be done to secure a lasting, structural shift towards consumption, by expanding the scope of social policies, moving ahead on financial sector reform, and undertaking corporate governance reforms,” he said. Continue reading
BBC NEWS |2009/11/16 | 06:48:02 GMT
Figures released by the Japanese government show that the country’s economy has grown for a second successive quarter. The world’s second biggest economy grew by 1.2% in the three months from July to September – faster than economists had predicted. However, analysts say overall growth is likely to be sluggish for years. The global downturn had plunged Japan into its worst recession since World War II. Japan’s Trade Minister, Masayuki Naoshima, apologised for disclosing the market sensitive third-quarter GDP figures to oil industry executives ahead of its official release. It was the first GDP data released after Prime Minister Yukio Hatoyama’s new government took power in mid-September.
Most economists say there is little chance of Japan’s economy returning to recession, given the latest figures. Stimulus measures were credited with lifting consumer spending and capital spending rose, but analysts say growth will slow as wages stay low. Even though subsidies and tax breaks enacted by the previous government will remain in place until next year, an expected fall in year-end bonuses and a scarcity of jobs mean households will have less to spend. “With weakness ahead in private consumption or public spending, a slowdown is unavoidable in the January-March and April-June quarters,” Kyohei Morita, chief economist at Barclays Capital in Tokyo, told Reuters. “The one bright spot is that capital spending turned positive. However, while this signals that capital spending is starting to rise from the bottom, the size is still not enough to promise the kind of speed that would be required to prevent a slowdown in the first half of 2010,” the economist added. Continue reading
12/11/2009 | 13:19 GMT+5:30 | nvs
WTO Director General Pascal Lamy, who is attending a meeting of ‘Asia-Pacific trade and finance ministers in Singapore, told CNBC that the rising unemployment is the biggest threat to free trade and could spark greater protectionist policies around the globe. He said that he didn’t expect any improvement in job situation in the next one or two years, as reported by Reuters on Thursday. Rising unemployment inevitably leads to resorting to protectionist measures by the countries so that domestic market may be protected to generate jobs for the local unemployed. Entire industrial world is wary of long jobless queues since the eruption of global financial crisis and which has been the prime reason for various bigger countries resisting to begin to withdraw from stimulus measures. Economic analysts are expecting the unemployment rate in the US to reach 10.5% by the middle of the next year 2010.
But Japan is somewhat showing optimistic results in employment sector. Japan’s unemployment rate has come down to 5.3% for October from 5.5% in September and from 5.7% in July. Still Industrial and other job creating sectors are not able to generate employment. It was reported by the Reuters that Lamy expressed some satisfaction that so fat protectionist measures are contained and under control. But his claim cannot be taken as granted as it is evident that the US & China, and EU & China have lodged their complaints on each other WTO for ruling which are still pending. Temporary arrangements are in place with the help of bilateral discussions so that regular trade between the respective countries may not get interrupted. But trade disputes are like unknown time bomb, which may explode at any time.
BBC News | Shanghai | 06:33 GMT, Wednesday, 11 November 2009
The latest economic data from China suggests that industrial production grew year on year at a level faster than expected. Retail sales also rose by more than analysts had predicted, while consumer prices continued to fall. China’s National Bureau of Statistics says the country’s latest economic data shows it is well on track to meet its target of 8% growth this year. The government’s huge economic stimulus package is likely to have helped a lot. The data indicates that activity in factories and workshops increased by 16.1% in October compared to a year ago.
Increase in Optimism
That is the highest level of growth since March last year. China’s statisticians are starting to sound more optimistic than they have done in a while. Importantly, they see evidence in this latest data that Chinese consumers are starting to make more of a contribution to economic growth here. Retail sales were higher in October than September. China needs consumers to spend more to spur domestic demand for the goods its factories produce, as it is unlikely to be able to rely on US consumers in the years ahead in the same way that it could before the financial crisis. The growth in activity in the country’s factories and workshops beat analysts’ forecasts too. There was better news in October’s trade figures though – the rate of decline in exports last month as the smallest in 10 months, supporting anecdotal evidence from producers that orders from customers abroad have been picking up for several weeks now. China has been trying to boost domestic demand for the goods its factories make, as exports have been declining for 12 months now. The supply of new loans was markedly lower than many analysts had expected suggesting that banks had listened to concerns that the easy access to credit here was creating the risk of asset bubbles and put in place more stringent conditions for those trying to borrow money.