“U.S. factory orders increased in December even though companies trimmed their orders for goods that signal investment plans.
The Commerce Department said factory orders rose 1.8 percent in December compared to November, when orders had fallen 0.3 percent.
Economists polled by Reuters had forecast a rise of 2.2 percent in factory orders for December….”
Comments »“Consumers have been spending more on gasoline than they have in nearly three decades.
With pump prices at their highest level on record for this time of year, the stage is set for a even greater climb in gasoline prices and expenditures than in 2012. Retail gasoline prices have surged 17 cents in a week to top $3.50 a gallon on average, posting the highest prices on record for the beginning of February.
According to AAA, the national average price of regular gasoline is $3.52 a gallon, 4 cents higher than the average price a year ago. The average price was $3.35 a gallon a week ago and $3.30 a gallon a month ago.
Meanwhile, the U.S. Energy Information Administration reported Monday that gasoline expenditures in 2012 for the average U.S. household reached $2,912, or just under 4 percent of income before taxes. This was the highest estimated percentage of household income spent on gasoline in nearly three decades, with the exception of 2008, when the average household spent a similar amount. Gasoline prices averaged $3.63 a gallon in 2012, according to EIA.
Although overall gasoline consumption has decreased in recent years, a rise in average gasoline prices has led to higher overall household gasoline expenditures, according to the EIA….”
Comments »“China’s services industries grew at the fastest pace since August as gains in retailing and construction aid government efforts to drive a recovery in the world’s second-biggest economy.
The non-manufacturing Purchasing Managers’ Index rose to 56.2 in January from 56.1 in December, the Beijing-based National Bureau of Statistics and China Federation of Logistics & Purchasing said in a statement yesterday. A reading above 50 indicates expansion.
The Shanghai Composite Index rose, extending gains after last week posting the biggest weekly rally since October 2011 on optimism that China can sustain its expansion, with new home prices rising in January by the most in two years. Strength in services may assist a shift to a consumption-driven economy as the government targets more sustainable growth and factory output contributes to record pollution.
“A mild growth rebound appears on track,” said Ding Shuang, senior China economist with Citigroup Inc. in Hong Kong. “With downside risks to growth significantly reduced and inflation expectations rising, policies may shift away from an easing bias to a more neutral position.”
The Shanghai stock gauge rose 0.4 percent as of 10:12 a.m. local time. The MSCI Asia Pacific Index of shares gained 0.7 percent as of 11:11 a.m. in Tokyo.
Ding estimates consumer-price gains will pick up to 3.5 percent by the end of the year from 2.5 percent in December while economic expansion in the first half will accelerate to more than 8 percent due to the impact of last year’s government policies to support investment and infrastructure spending.
“Kentucky Republicans and business leaders are promoting an unlikely way to boost the state’s economic development: Grow cannabis.
Kentucky leaders want their state to become the king of hemp, a plant that comes from the same species as marijuana, though doesn’t contain enough of the intoxicating ingredient to cause a high.
They want to help state farmers overcome the federal government’s treatment of hemp as an illegal drug, and produce it on an industrial scale, for use in items such as soap, horse bedding, building materials and auto body parts. Kentucky is one of at least five states, including Indiana and Vermont, where lawmakers have introduced measures allowing hemp farming.
The Kentucky effort is supported by legislative leaders, the state chamber of commerce, Republican U.S. Senator Rand Paul and agricultural commissioner James Comer, a Republican who campaigned on bringing the crop to his state.
“It could produce thousands of jobs,” Comer said in an interview.“Industrial hemp is totally different than marijuana. It should be treated like corn or soybeans.”
U.S. retail sales of products with imported hemp were more than $452 million in 2011, according to an estimate by the Hemp Industries Association, based in Summerland, California.
All One God Faith Inc., a closely held company in Escondido, California, that markets Dr. Bronner’s soaps, is considering expanding to Kentucky if hemp is grown there, said David Bronner, the company’s chief executive officer. The soaps contain hemp.
“U.K. manufacturing expanded for a second month in January as orders rose and output surged the most since September 2011.
A gauge of factory activity was at 50.8, compared with a revised 51.2 in December, Markit Economics and the Chartered Institute of Purchasing and Supply said in London today. A reading above 50 indicates expansion. Separate reports today showed euro-area manufacturing shrank less than initially estimated last month, while Chinese manufacturing expanded.
Britain’s economy shrank by a more-than-forecast 0.3 percent in the fourth quarter and the Bank of England said last month that “substantial headwinds to recovery remained.” Still, Markit said the fact that its factory index remains above 50 is an encouraging start to 2013.
“On the surface this is good news for manufacturing and should be welcomed,” CIPS Chief Executive Officer David Noble said in the statement. “However, underlying factors suggest deep rooted problems remain.”
The median forecast of 29 economists in a Bloomberg News survey was for a decline to 51 in January from an initially reported 51.4. Markit said the increase in the output gauge reflected a “robust increase in consumer goods.” Domestic orders improved, countering a decline in export orders, and the labor market “continued to stabilize,” it said.
“Russian manufacturing rebounded in January from a 15-month low as an increase in domestic business helped propel new orders at the fastest pace since March 2011, HSBC Holdings Plc said.
The Purchasing Managers’ Index advanced to 52.0 in January from 50.0 in December, HSBC said today in an e-mailed statement, citing data compiled by London-based Markit Economics. A reading above 50 indicates an improvement in business conditions, while a result below that suggests a deterioration. Economists projected a smaller advance to 50.2, according to the median of five estimates in a Bloomberg survey.
Russia, the world’s largest energy exporter, saw growth slow last year to the weakest pace since a 2009 contraction. The improvement last month suggests manufacturing is stabilizing, which may bolster the broader economy, according to Alexander Morozov, chief economist for Russia at HSBC in Moscow. Manufacturing led industrial production gains for much of 2012.
“The manufacturing sector has rebounded in January after the bleak results in December,” Morozov said in the statement. The growth in new orders was “particularly strong” and was similar to trends before the 2008 crisis, he said….”
Comments »“South Africa’s purchasing managers’ index rose in January as a weaker rand may help boost exports and mining output resumed after strikes at platinum and gold mines, Kagiso Tiso Holdings said.
The seasonally adjusted index increased to 49.1 from 47.4 in November, Johannesburg-basedKagiso said in an e-mailed statement today. An index level below 50 indicates a contraction in factory output. The Bureau for Economic Research, based at the University of Stellenbosch near Cape Town, conducts the PMI survey for Kagiso.
“The apparent stabilization in the EU economy and the weaker rand exchange rate may have helped,” Hugo Pienaar, senior economist at the BER, said in the statement. “Unfortunately, the latest PMI results also contain some worrying developments.”
South Africa’s economy is slumping as concerns about growth in Europe, the U.S. and Chinasap demand…”
Comments »South Korea’s manufacturing PMI fell to 49.9 in January from 50.1 a month ago.
Any reading above 50 signals growth in the manufacturing sector.
Here are the key points from Markit:
From HSBC’s Ronald Man:
“Korea’s latest manufacturing conditions highlight the country’s dependence on trade. New export orders gained momentum and employment growth rose in anticipation of higher output over the coming months. However, the domestic economy remains weak and policymakers in Seoul will likely maintain an easing stance to keep domestic demand firm until 2H 2013, when export growth recovers meaningfully and generates an export-led recovery.”
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“China’s NBS just published its official manufacturing PMI report, and it’s a bit of a disappointment.
The headline number unexpectedly slipped to 50.4 in January.
Economists were expecting an increase to 51.0 from 50.6 in December.
The good news: any reading above 50 signals expansion.”
Comments »“South Africa posted its first trade gap for December since 2008 as factories cut back on imports and a weaker rand boosted costs, threatening to widen the current- account deficit and undermine the currency.
The shortfall narrowed to 2.7 billion rand ($300 million) from 7.9 billion rand in November, the Pretoria-based South African Revenue Service said today in an e-mailed statement. The median estimate of 12 economists in a Bloomberg survey was 2.4 billion rand.
South Africa’s deficit in 2012 was more than six-fold larger than a year before at 117.7 billion rand as slower global growth and mining strikes curbed exports in Africa’s largest economy. That put pressure on the current account, the broadest measure of trade in goods and services, contributing to the rand’s slump to a four-year low.
While imports usually decline in December as factories and mines shut down, exports also fell in the month, contributing to the shortfall. Exports dropped 9.8 percent to 59.8 billion rand, led by a 32 percent slump in prepared foodstuffs and beverages, while shipments of base metals fell 23 percent.
Imports decreased 16 percent to 62.5 billion rand, led by a 42 percent plunge in shipments of original equipment components. Textile imports slid 33 percent.
The Reserve Bank has kept borrowing costs at the lowest level in more than 30 years….”
Comments »“Japan’s industrial production rose less than economists forecast, suggesting that a recovery in the nation’s manufacturing sector is lagging a weakening yen.
Output rose 2.5 percent from November, when it declined 1.4 percent, the Trade Ministry said in Tokyo today. The median estimate of 25 economists was for a 4.1 percent gain. Production fell 7.8 percent from the previous year.
The outlook for the economy may improve this year as the depreciating yen and Prime Minister Shinzo Abe’s fiscal stimulus measures help to support corporate profits and stoke growth. Goldman Sachs Group Inc. last week raised its growth forecast for the year starting in April to 2 percent from 1.2 percent.
“We don’t need to be too pessimistic about the outlook,” said Naoki Iizuka, an economist at Citigroup Inc. in Tokyo. “Production will probably return to a clear recovery track in the coming months.”
The yen has depreciated more than 12 percent against the dollar in the past three months, the most among 16 major currencies tracked by Bloomberg. It was 0.2 percent higher at 90.94 per dollar as of 11:23 a.m. in Tokyo. The Nikkei 225 Stock Average (NKY) was down 0.6 percent at the lunch break today after gaining for the last 11 weeks.
While the data showed that production of transport equipment rose 6.9 percent on a seasonally adjusted basis, Japan’s three largest automakers — Toyota Motor Corp. (7203), Honda Motor Co. and Nissan Motor Co. — reported falling domestic production in December from the previous month….”
Comments »“The Philippine and Taiwan economies grew more than forecast last quarter, and Singapore’s jobless rate fell to a five-year low, signaling an upswing at the end of 2012 that underscoresAsia’s role leading a global recovery.
In the Philippines, gross domestic product grew 6.8 percent from a year earlier, while Taiwan reported a preliminary 3.42 percent gain and upgraded its full-year growth forecast. Singapore’s unemployment was 1.8 percent.
Asia’s resurgence as China rebounds contrasts with the U.S. yesterday reporting an unexpected decline in gross domestic product after defense spending plunged. Meantime, Japan’s economic outlook depends on Prime Minister Shinzo Abe reviving wages and spending, with less-than-forecast industrial output for December highlighting the challenge ahead.
“Asia is leading the global recovery,” said Glenn Levine, an economist at Moody’s Analytics in Sydney, who has covered Asian economies for almost eight years. “China has started to gather momentum as the various domestic stimulus policies kick in and that lifts the region. Southeast Asia is doing very well autonomously.”
Taiwan raised its forecast for this year’s growth to 3.53 percent from 3.15 percent as China’s economic rebound boosted its imports, underscoring President Ma Ying-jeou’s case for closer trade and investment ties. The island plans to allow more visitors and securities investment from the mainland, and let domestic lenders conduct business in yuan by early February.
Purchases of short and long term securities will sty at a rate of $40-$45 billion per month.
Economy has paused in recent months due to weather and transitory factors.
Inflation is running below expectations.
Growth is expected to proceed at a slow pace.
Dollar continues to be weak, markets pop briefly into green territory, but fall back quickly in slightly negative territory….
Comments »Except that simply isn’t true.
There was no decrease in government spending during the fourth quarter of last year. In fact, the government spent more money between October and December of 2012 than it did during the previous two quarters. So federal spending actually increased during the 4th quarter.
Would you like some facts to go with your media propaganda?
1st: 966,188
2nd: 884,957
3rd: 809,969
4th: 907,912
Now we’re being told the economic slide wasn’t due to an overall decrease in State spending, but that it was due to a specific decrease in federal spending, and, naturally, Hurricane Sandy:
“A likely explanation for the sharp decline in Federal defense spending is uncertainty concerning the automatic spending cuts that were scheduled to take effect in January, and are currently scheduled to take effect on March 1st,” explains Alan B. Krueger, the Chairman of the Council of Economic Advisers in a statement. “The decline in government spending across all levels reduced real GDP by 1.33 percentage points in the quarter.”
Here’s Ezra Klein, who the Washington Post still sells as an objective journalist…”
Comments »“New research shows that workers spent more of the payroll tax cut than expected — even more then they had planned to — thereby boosting the economy more than thought.
The bad news is that absence of the tax cut may hurt the economy more than expected.
Experts often debate if a lump sum, one-time tax rebate or small tax cuts spread out over time prompt workers to spend more and therefore stimulate the economy more.
The study by economists at the Federal Reserve Bank of New York found that tax cuts spread over time lead consumers to spend more — even more than they want to.
The 2011 payroll tax cut that reduced the withholding rate for Social Security and Medicare from 6.2 percent to 4.2 percent for about 155 million workers ended in January.
While workers intended to spend 10 to 18 percent of their tax-cut income, they reported actually spending 28 to 43 percent of the funds, the research showed. Only 12 percent planned to spend it, but 35 percent ended up spending most of it.
Why the difference between intentions and actions?
The researchers point to what they call “mental accounting.” When ask what they would to with the extra income in early 2011, workers viewed the additional income as single large amount. But they received it in relatively small amounts in every paycheck, so came to view it as extra income.
The end of the payroll tax cut may be a major reason for the sudden drop in the consumer confidence in January, which fell to its lowest level since November 2011.
The study shows that tax cuts like the payroll tax holiday have more impact than previously thought, notes Howard Gleckman of the Urban-Brookings Tax Policy Center.
Comments »
“Brazil’s broadest measure of inflation slowed less than analysts expected as the government struggles to rein in consumer prices that will be pressured by new fuel price increases. Swap rates rose.
Wholesale, consumer and construction prices, as measured by the IGP-M price index, rose 0.34 percent this month, down from a 0.68 percent jump in December, the Getulio Vargas Foundation said on its website today. The gain compares with a median estimate of a 0.32 percent increase from 29 analysts surveyed by Bloomberg. The index, which is weighted 60 percent in wholesale prices, rose 7.91 percent in the past 12 months.
President Dilma Rousseff announced this month cuts to utility rates as part of plan to improve competitiveness and tame consumer price increases that have exceeded the government’s 4.5 percent target in the past 28 months. That opened the door for state-controlled oil companyPetroleo Brasileiro SA (PETR4) to say yesterday that it would raise gasoline and diesel prices by 6.6 percent and 5.4 percent, respectively.
The increase in fuel prices is less than Petrobras needs although “it will be very difficult for the government to accept new increases, especially when inflation is such a big problem,” Pedro Tuesta, chief economist at 4Cast Inc., said by telephone from Washington.
Swap rates on the contract maturing in January 2015, the most traded in Sao Paulo today, rose two basis points to 7.89 percent at 9:24 a.m. local time. The real was little changed at 1.9853 per U.S. dollar.
“Spain’s recession deepened more than economists forecast in the fourth quarter as the government’s struggle to rein in the euro region’s second-largest budget deficit weighed on domestic demand.
Gross domestic product fell 0.7 percent in the three months through December from the previous quarter, when it declined 0.3 percent, the Madrid-based National Statistics Institute said today. That’s more than the 0.6 percent contraction the Bank of Spain predicted on Jan. 23. GDP dropped 1.8 percent in the fourth quarter from a year earlier and 1.37 percent in the full year from 2011, INE said.
The European Commission this week signaled it may recommend easing Spain’s budget goals for the fourth time in a year as unemployment in the euro region’s fourth-largest economy rose to a record 26 percent at the end of Prime Minister Mariano Rajoy’s first year in power.
“Risks on this number are clearly on the downside,” Ruben Segura-Cayuela and Laurence Boone, London-based Bank of America Merrill Lynch economists, wrote in a note after INE released GDP data. “The recent behavior of indicators would suggest a stronger impact than anticipated of tax increases on domestic demand.”
The yield on Spain’s 10-year benchmark rose one basis point to 5.17 percent at 10:42 a.m. in Madrid after a euro-era high of 7.75 percent in July. The spread with German borrowing costs has narrowed around 45 percent to 3.47 percentage points. Investors see bonds from so-called EU periphery countries offering even more gains than last year after European Central Bank President Mario Draghi pledged to do whatever is needed to save the 17- nation euro….”
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