Friday, December 10, 2010

Top 5 Economics Graphs of the Week - 11 December 2010

This week we look at the international trade stats for the US and China, with some interesting signs in the China data. Then we review an interesting short term trend in US consumer credit, before checking the jobs data out of Australia. Finally we review some of the monetary policy decisions out over the past week.

1. China International Trade
China announced its trade data on Friday, and revealed record numbers on both imports and exports. Exports jumped to an all time high of $153.3bn (up 13% month on month and 35% year on year). Imports also rose, hitting $130.4bn (up 20% m/m and 38% y/y), leaving a trade surplus of $22.9bn and a $233bn rolling 12 month surplus. The results are pretty interesting on a global basis when you think about the climb in imports, but for China the results could be somewhat double-edged. For one the surplus will raise pressure on the Yuan, and the strong exports could also impact on inflation - but more about that later...

2. US Trade Balance
The US trade deficit reduced slightly in October to -$38.7billion vs consensus -$44bn and previous -$44bn. The reduction was driven by a fall in the petroleum gap ($19.1bn vs $21.7 bn), but the non-pretroleum shortfall also shrank ($31.0bn vs $34.1bn); with imports down slightly and exports up slightly. Though it's only one month it is an interesting result, if it could be sustained. If you think about global imbalances it should be countries like the US that export their way out of the recession given the large current account deficit (not to mention the other problems)... but just how that could be done or how realistic that is is another question.

3. US Consumer Credit
Over to US consumer credit, the short term trend emerging is somewhat interesting, albeit the figures are year on year so coming off a low base comparator it's easy to look good. But it does initially look like the worm has turned. However it probably shouldn't really just yet as the deleveraging cycle still needs to happen for the recovery to be really sustainable, otherwise it's just back to old habits (and I suppose if everyone's willing to take the consequences of that then fine). But if you look at the detail the increase is coming from non-revolving credit (mostly auto-loans), while revolving credit (i.e. credit cards etc) is still contracting.

4. Australia Jobs Growth
Australia beat all expectations with its November job numbers, recording 54,600 new jobs in November, against consensus estimates for 20,000 with 55,100 full-time jobs added. The jobless rate fell to 5.2% from 5.4%. Much of the strength in the Australian economy is coming from the booming resources sector, which is benefiting from high commodity prices, emerging markets demand, and increasing amounts of investment; including several significant projects. Of course the other part of the economy is still chugging along at the same pace as the likes of NZ or the US, but the jobs results show that the mining sector is starting to spin-off some benefits to the rest of the economy.

5. Monetary Policy
Banks in Mauritius, Australia, Canada, Iceland, New Zealand, Serbia, Brazil, Ghana, Korea and the UK announced their monetary policy decisions last week. The standouts were Serbia +100bps and Iceland -100bps. But the main event was yet another 50bp hike to the Required Reserve Ratio by China, which will bring the RRR to 18.50% on the 20th of December. But for the most part central banks held steady as uncertainty ruled, with banks holding rates to help the economy (in the case those with low rates) and others holding to stem inflation (in the case of those with high rates). The theme of emerging market overheating and resultant tightening is still playing through with India saying it could raise rates again, and Russia likely to raise rates later in December.


So we saw China international trade rocketing along, setting new records on both exports and imports, and cementing its growing trade surplus. Over in the US we saw a slight decline in the trade deficit, but one month does not a trend make. Also from the US we saw the possible beginning of a turnaround in consumer credit, but possibly this is too soon. In Australia the jobs numbers surpassed all expectations as the Australian economy cruises along. In monetary policy there was a couple of outliers, but the main move was no move, apart from China who tightened the RRR once again as it heads into 2011 - the year of "prudent" policy.

1. China Customs
2. Trading Economics
3. US Federal Reserve
4. Australian Bureau of Statistics

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