Yes, Chinese New Year may have played a part, but China’s lower export and import figures January is very worrying.
China’s imports plunged a huge 43.1% last month from a year earlier, the sharpest drop since 1995.
Exports shrank 17.5% in the same period; the third monthly fall in a row, the biggest fall in 13 years.
There were five fewer business days last month in China because of New Year, so the fall in exports can be partly traced to that, but not imports where the sharp fall in commodity prices, led by oil has had an undoubted impact, as have lower volumes.
And overall, the figures were much lower than forecast, taking into account the impact of New Year.
But so has lower demand: analysts say copper imports were lower than expected in January and imports of oil and oil products also fell.
The resulting trade surplus was $US39.11 billion, the second biggest ever, compared with $US39.0 billion in December and a record $US40.1 billion in November.
The Lunar New Year occurred in February last year, so there should be a pick up from these low figures next month
The forecast was for a fall in exports of nearly 11% and a drop in exports of 28.5%.
Instead the fall in exports and imports in January accelerated sharply from December’ drop of 2.8% and 21.3%, respectively.
Although some economists had warned about the influence of New Year, they were still concerned that exports and imports would fall by more than expected because of the slump in exports elsewhere in Asia.
Taiwan’s exports fell 44% in January, South Korea’s by 32% in December and Japan’s by 35% in the same month.
All three countries are major suppliers of components that are then assembled in factories in China.
All three report that exports to China have fallen sharply in recent months.
The news comes after the 1% rise in consumer prices last month and the 3.3% fall in producer prices: both signs of the slump gripping the country.
Confidence levels in the Australian economy seem to be sending a story different to that coming from the housing sector.
Both consumer and business confidence has dropped so far this year according to surveys this week.
But as expected the number of home loans, seasonally adjusted, jumped 6.4% in December from the previous month, according to the Australian Bureau of Statistics.
That was better than any forecast. December’s rise was the third consecutive month of gains in home-loan approvals, as firstly lower interest rate cuts and then the higher new and existing home buyers grants kicked in.
Loans for new dwellings skyrocketed 15.2% in the month, seasonally adjusted, as falling interest rates and grants for first time new home buyers started being okayed.
Owner-occupied housing bounced by 7.1% in December, seasonally adjusted, while investment loans edged up 2.9%
Overall, the ABS said that in seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions in December rose 5.9% from November.
And from yesterday’s interim statement discussion from the Commonwealth Bank, that growth has continued into the new year.
So despite this good news from an important sector for the economy, business overall, is gloomier than it ever has, and consumers are feeling glum again, although the proportion who say their own financial picture has brightened has risen.
But the latest Westpac-Melbourne Institute survey of consumer confidence which dropped again this month, despite a rate cut and government spending packages.
Tuesday it was the National Australia Bank’s survey of business confidence reporting a slump in the corporate sector to a record low, with retailing, mining and manufacturing leading the way down.
Monday the ANZ jobs figure for January was down for a ninth month in a row, yet newspaper job ads surprisingly rose and the internet was very weak. The overall fall was the smallest since October, but it was still down.
The NAB saw confidence among businesses large and small reverse December’s gains and drop to a record low in January, with the outlook for employment and forward orders hitting recessionary levels.
The monthly survey from Westpac and the Melbourne Institute showed a slump in confidence levels among the country’s consumers, despite the spending from the December stimulus and talk about a new, $42 billion package from Canberra.
The sentiment index declined 4.6% to 85.8 points, in a survey of 1,200 consumers conducted last week, when talk was active about the latest package, the decision by the Federal Opposition to oppose it and the Reserve Bank’s 1% cut in its official interest rate.
The monthly Westpac-Melbourne Institute survey shows consumer sentiment dropped 4.6% in February to 85.8 points from 89.9 points in January, which itself was a 2.2% slump from the previous month.
The gauge is for the second consecutive month below the 100-point mark that divides pessimism from optimism, as the effects of the government’s Christmas stimulus package fade.
Westpac’s head economist, Bill Evans said in a statement the survey result "represents a serious challenge for policy” at the central bank.
“Logically it points to consumers saving any excess income” rather than boosting spending, he said.
But he also pointed out that consumers are saying they fell better about their current financial condition.
But it’s a well-known stage in a recession where consumers, fearful for their jobs and the future, start saving.
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