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Rail Traffic In China Points to a Turnaround

“Many economists and observers are skeptical of the validity of much of China’s economic data. Apparently, they are less skeptical of the electricity production and consumption and freight volume. These times series are often used to get a better handle of Chinese growth.

This Great Graphic comes from Also Sprach Analyst. The first chart (below) shows various modes of goods transportation and China’s GDP. The best fit is with freight traffic.

The second chart focuses on rail cargo volume. The volume of China’s rail freight in October was 3.2% lower on a year-over-year basis (vs -5.4% in September), but on a month-over-month basis increased by 5.8%.

The key take away is that the rail traffic lends credence to the recent series of data that suggest the world’s second largest economy is stabilized after slowing for the past seven quarters. Globally speaking, this is a small offset to the prospects of weaker US, Europe and Japanese growth profiles….”

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Germany Celebrates an Unexpected Uptick in PMI data

“There have been two big economic stories during the European downturn.

1) The European economy has been a horror show.

2) Somehow, Europe’s biggest “locomotive,” Germany, always seems to come through.

And just when it looked like Germany was about to crack… this happens.

German PMI numbers jump. There was a very nice number in today’s services report. Here’s a summary from Markit:”

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U.K. Service Index Contracts for the First Time in 2 Years

“U.K. services growth unexpectedly slowed in November as demand fell for the first time in two years, increasing the chance the economy will shrink again this quarter.

gauge fell to 50.2, the lowest in 23 months, from 50.6 in October, Markit Economics and theChartered Institute of Purchasing and Supply said in London today. The reading is barely above the 50 line that divides contraction and expansion. A separate report showed services growth inChina slowed.”

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Australia’s GDP Slows More Than Expected, Consumption Hits a 2.5 Year Low

“Australia’s economy slowed last quarter on the weakest consumer demand in 2 1/2 years and tighter government spending, validating the central bank’s decision to cut interest rates.

Third-quarter gross domestic product advanced 3.1 percent from a year earlier after a revised 3.8 percent expansion in the April-June period, a Bureau of Statistics report released in Sydney today showed. That matched the median of 25 estimates in a Bloomberg News survey. Growth was 0.5 percent from the previous three months, when the quarterly gain was 0.6 percent.

The report covers a period when companies including BHP Billiton Ltd. scaled back mining projects in response to lower commodity prices. Reserve Bank of Australia Governor Glenn Stevens lowered rates four times this year to help support consumption and housing as an elevated currency extended a slump in manufacturing and services, and the government sought spending cuts to eliminate a budget deficit.”

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Global PMI Data Dump For You to Chomp On….Crazy Taste

HEADS UP: The world’s biggest economies will release their November manufacturing PMI reports starting at 7:01 PM EST, and this is our scorecard.

Economists will want to see if the Asian economies are continuing the improvement they saw in last month’s PMI reports. They’ll also want to see if Europe’s manufacturing downturn is continuing to accelerate.

On Friday, China’s National Bureau of Statistics released the country’s official PMI.  The number increased from 50.2 in October to 50.6, which was a bit shy of the 50.8 expected by economists.  However, the internal measures of the report confirm that growth probably bottomed in Q3 and that the economy was accelerating again.

At the beginning of each month, Markit, HSBC, RBC, JP Morgan and several other major data gathering institutions publish the latest local readings of the manufacturing purchasing managers index (PMI) for countries around the world.

Each reading is based on surveys of hundreds of companies. Read more about it at Markit.

These are not the most closely followed data points.  However, the power of the insights is unparalleled. Jim O’Neill, Chairman of Goldman Sachs Asset Management, believes the PMI numbers are among the most reliable economic indicators in the world.  BlackRock’s Russ Koesterich thinks it’s one of the most underrated indicators.

Click here to refresh this page for the latest updates to our scorecard > “

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South Korean Exports Grow by 3.9%, Fragile Recovery Ahead


“SEOUL (Reuters) – South Korean exports last month marked their first back-to-back growth of the year, but demand from the advanced economies was weak, data showed on Saturday, indicating anyglobal recovery would be fragile at best.

November exports grew by 3.9 percent over a year earlier to $47.8 billion on top of a revised 1.1 percent rise in October, while imports last month rose by 0.7 percent to $43.3 billion, the Ministry of Knowledge Economy data showed.

The November data, released for the first time by a major exporting economy, and the robust survey findings in China disclosed earlier in the day offered fresh signs of the global economy regaining some momentum.

Shipments to China and the southeast Asian countries posted sharp gains over a year earlier, whereas demand from the United States and the European Union shrank, according to break-down figures for the November 1-20 period released later.

“Robust data from China and today’s Korean data increase the chances for Korean exportsmaintaining a modest recovery,” said Park Sang-hyun, chief economist at HI Investment & Securities.


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Q4 GDP in the U.S. is Getting Off to a Slow Start


“U.S. consumer spending fell in October, partly reflecting the effects of superstorm Sandy. The bad start to the fourth quarter of the year, coupled with a mixed third-quarter gross domestic product report out earlier this week, was enough to trigger downgrades to a handful of forecasts.

Macroeconomic Advisers chopped three-tenths of a percentage point from its fourth-quarter tracking estimate, and now expects 1.1% growth.

“Unexpected weakness in real [personal consumption expenditures] in October combined with weakness in personal income through October suggests less PCE growth in the fourth quarter,” the firm said.

Barclays Bank reduced its GDP tracking estimate by four-tenths of a point to 1.8%, but cautioned that a rebound in consumer spending could boost that later this year. “All in all, clearly a very soft start to consumption in 4Q,” Barclays said.”

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Income and Spending Go Flat to Negative

“U.S. consumer spending fell in October for the first time in five months as income growth stalled, suggesting slower economic growth in the fourth quarter.

The Commerce Department said on Friday consumer spending fell 0.2 percent after an unrevised 0.8 percent rise in September.

It said it could not quantify the impact ofSuperstorm Sandy, but added it made adjustments where source data was not yet available or did not reflect the effects of the storm.

Though the storm, which slammed the East Coast in late October, put a brake on automobile sales, the drop in spending last month was in part a reflection of the weak economic fundamentals.

Economists polled by Reuters had expected consumer spending, which accounts for 70 percent of U.S. economic activity, would be flat last month.

When adjusted for inflation, consumer spending fell 0.3 percent, the first decline since June, after rising 0.4 percent the prior month.

It was also the largest decline since September 2009 and implied growth in consumer spending this quarter would struggle to exceed the third-quarter’s 1.4 percent annual pace, which was the slowest in more than a year.”

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GDP Growth Slows to a Three Year Low in India

“Indian expansion slowed last quarter to match a three-year low as growth in domestic spending and exports moderated, adding pressure on the government to extend an economic-policy overhaul to spur investment.

Gross domestic product rose 5.3 percent in the three months to Sept. 30 from a year earlier, in line with the median of 42 estimates in a Bloomberg News survey and down from 5.5 percent in the previous quarter, data from the Central Statistical Office showed in New Delhi today.”

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GDP Growth Slows More Than Estimated in Poland

Poland’s economy slowed more than economists forecast in the third quarter as export gains failed to offset weaker consumer spending, boosting expectations for an interest-rate cut next week.

Gross domestic product climbed 1.4 percent from a year earlier, which was the slowest pace since the second quarter of 2009 and compared with a 2.3 percent increase in the previous three months, the Warsaw-based Central Statistics Office said today. Economists expected a 1.8 percent increase, according to the median of 35 estimates in a Bloomberg survey. GDP rose a seasonally adjusted 0.4 percent from the previous quarter.

Poland, the only economy in the 27-nation European Union to keep expanding through the global slump in 2009, is battling to avoid its first recession of the post-communist era. Prime Minister Donald Tusk has eased his deficit goals for this year and next to maintain growth, while the central bank reduced its main rate this month for the first time in three years.”

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Vietnam Vows to Reign in Inflation and Boost Economy After Credit Bubble Destruction in the Banking Industry

Vietnam’s Prime Minister Nguyen Tan Dung pledged to bring inflation down to a decade low as the nation seeks to boost foreign investment and cope with the aftermath of a credit boom that’s hobbled the banking industry.

“Inflation in 2012 will be about 7 percent and next year we will have even better control of it, at about 6 percent,” Dung, 63, said in an interview in Hanoi on Nov. 28. He said overseas investment will rise “sharply” in the next two years as officials overhaul state enterprises and recapitalize banks.”

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South Africa Posts Record Trade Deficits Due to Strikes

“South Africa posted a record trade deficit in October as mining strikes cut output and machinery and chemical imports surged.

The shortfall widened to 21.2 billion rand ($2.4 billion) from 13.8 billion rand in September, the Pretoria-based South African Revenue Service said today in an e-mailed statement. Themedian estimate of seven economists in a Bloomberg survey was 15.5 billion rand.

South Africa’s trade gap of 104.6 billion rand in the first 10 months of this year is more than 10-times bigger than a year ago as a series of strikes since August shut mines owned by companies including Lonmin Plc (LMI) and Anglo American Platinum Ltd. (AMS) The labor turmoil will reduce this year’s economic growth rate by 0.5 percentage point and lower exports by more than 12.5 billion rand, according to the National Treasury.”

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Brazil GDP Grows at Half Expectations

Brazil’s economy expanded in the third quarter at half the pace forecast by economists, as government stimulus efforts fail to revive investment that fell for the fifth straight period. Rate futures plunged.

Gross domestic product grew 0.6 percent in the third quarter, the national statistics agency said today in Rio de Janeiro. That was less than the forecasts of all 54 economists surveyed by Bloomberg whose median estimate was for a 1.2 percent expansion.

President Dilma Rousseff’s government has slashed interest rates to record lows, cut taxes and boosted spending over the past 12 months to prop up an economy heading toward its worst two-year performance in a decade. While the efforts are keeping retail sales buoyant amid a global slowdown, companies are holding back on investment. With growth still patchy, the government is now focusing on reducing production costs.”

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Does GDP Data Suggest the Economy is Soaring ?

“One glance at today’s second read of Q3 GDP may leave some with the false impression that the US economy is soaring, because after sliding to 1.3% in Q2, and after a preliminary read of 2.0% in the first Q3 estimate, today’s print, which missed estimates of a 2.8% print, did nonetheless rise to 2.7%. “A stunning success”, the administration sycophants would say. Absolutely wrong. Because a quick glance at the underlying numbers shows the true picture of the economy which contracted far more than most expected, with personal consumption collapsing to 1.4% Q/Q, on hopes of a 1.9% rise, and down from 2.0%. In fact, at 0.99% personal consumption expenditures – the core driver of 70% of the US economy – were a tiny 36% of the headline number. Ironically today’s second GDP revision was far worse when analyzed at the component level, than the first Q3 estimate, which while lower overall at 2.0%, at least had personal consumption nearly 50% higher at 1.42%, or well over half of the total contribution. So what drove “growth” in Q3? Nothing short of the most hollow and worst components of GDP: Government Spending, which soared to 0.67% of the annualized number, the first positive print in years, and of course, Inventories, which were responsible for 30% of the headline number. Finally, and most importantly, Fixed Investment, aka CapEx, was a meager 0.1%, or the lowest GDP contribution since Q1 2011. Without CapEx there is no corporate revenue growth (and future hiring intentions) period.

Sadly not even Sandy can be blamed on the collapse in consumption in Q3,…”

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