China Inflation at 29-month Low

Posted on July 8, 2012 by macromon

Bloomberg reports,

China’s consumer-price inflation eased to a 29-month low in June, giving Premier Wen Jiabao more room to relax economic policies after the second interest-rate cut in a month.

The consumer price index rose 2.2 percent from a year earlier, the National Bureau of Statistics said today in Beijing. That compares with the 2.3 percent median estimate in a Bloomberg News survey of 32 analysts. Producer prices dropped 2.1 percent, versus the median forecast for a 2 percent fall.

Today’s inflation report marks a fifth month of price gains below Wen’s 4 percent target and may encourage the government to take further steps to aid growth that probably decelerated for a sixth quarter. Expansion in the three months through June probably slowed to the weakest in three years, putting Wen at risk of missing his 7.5 percent target for the year.

“The downward trend gives Beijing sufficient room for stepping up easing,” Qu Hongbin, co-head of Asian Economic Research for HSBC Holdings Plc in Hong Kong, said before the release.

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Week in Review

Posted on July 8, 2012 by macromon

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Global Trend Indicators

Posted on July 8, 2012 by macromon

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Global Slowdown Hits Japan Machinery Orders

Posted on July 8, 2012 by macromon

Huge drop and much worse than expected in Japan’s machinery orders.  The Japan Cabinet Office reports,

1)  The total value of machinery orders received by 280 manufacturers operating in Japan decreased by 14.5% in May from the previous month on a seasonally adjusted basis

2) Private-sector machinery orders, excluding volatile ones for ships and those from electric power companies, decreased a seasonally adjusted by 14.8% in May.

The slowdown in Europe and China really starting to bite globally.

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Japan and the IMF

Posted on July 8, 2012 by macromon

Ahead of the Annual Meetings of the International Monetary Fund-World Bank, due to take place in Tokyo later this year, this video takes a brief look at 60 years of partnership between Japan and the IMF
– International Monetary Fund

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The Next Hot “Emerging Market”

Posted on July 7, 2012 by macromon

NASA just released new pictures of what we think will be the next hot emerging market.  The picture wreaks of resources that can feed China and the developed world’s  insatiable demand for commodities.   It may take a few years but the race is on!

Long Space Cowboys!

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Back to the Future

Posted on July 7, 2012 by macromon

This is from our “must post file” and comes to us from the Economix blog via David Jones! Thanks DHJ!

I took that photo at the Museum of the City of New York, at its exhibit on the history of New York’s banks. The quotation sure sounds a lot like some of the prose used to describe the excesses of the recent credit bubble. (Except maybe the “over ploughing” bit, now that we’re no longer an agrarian economy.)

Such similarities are no accident, given that The New York Herald ran that stark assessment during the Panic of 1837, which was also a result of a major real estate bubble and banking crisis.

Past is prologue as human nature (greed)  and emotions (fear) never change!

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Weekly Eurozone Watch

Posted on July 6, 2012 by macromon

Key Data Points
German 10-year bund 26 bps lower;
Italy 46 wider;
Spain 88 wider;
Portugal 31 wider;
Italian and Spanish banks hit hard;
Euro falls 3 percent.

Commentary
Short shelf life of last week’s policy placebo.  Nor countries making noises of leaving Euro.

Finland is committed to being a member of the eurozone, and we think that the euro is useful for Finland. Finland will not hang itself to the euro at any cost and we are prepared for all scenarios.

Collective responsibility for other countries’ debt, economics and risks; this is not what we should be prepared for. We are constructive and want to solve the crisis, but not on any terms.

– Finnish Finance Minister Jutta Urpilainen

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U.S. Employment Situation – June 2012

Posted on July 6, 2012 by macromon

The jobs report disappointed recent upward revisions with nonfarm employment increasing 80K from May to June, with the private sector creating 84K new jobs.   Construction jobs, which we wrote about in our last post,  disappointed coming in with just a 2k increase with last month revised down another 7k.

Here’s the BLS,

Nonfarm payroll employment continued to edge up in June (+80,000), and the unemployment rate was unchanged at 8.2 percent, the U.S. Bureau of Labor Statistics reported today. Professional and business services added jobs, and employment in other major industries changed little over the month.

The number of unemployed persons (12.7 million) was essentially unchanged in June, and the unemployment rate held at 8.2 percent.

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Will Construction Begin to Lead Job Creation?

Posted on July 5, 2012 by macromon

Lots of chatter out there about a housing bottom and recovery.  Whether true or not the U.S. labor market sure could use one even though “residential building” employment as formally defined by the BLS is a surprisingly smaller share of total construction employment than most perceive.

Nevertheless,  construction employment was decimated during and around the Great Recession, losing over 2.2 million jobs from April 2006 to January 2011.   Construction employment peaked at 6.78 percent of total private nonfarm payrolls in April 2006 and has fallen to 4.98 percent according to the latest data from May.

Employment in the industry has significantly lagged the general recovery creating only 60K net jobs since bottoming in January 2011.  Last month it was a huge drag on the overall employment number, losing 28K jobs in May.

The capacity for job creation is there but will they build it?   Tomorrow’s numbers will be interesting.   Stay tuned.

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