Banks relaxed lending terms for euro-area companies and households for a third straight quarter at the end of last year, responding to a fresh rise in demand for loans, the European Central Bank said.
“Credit standards for all loan categories continued to ease in net terms in the fourth quarter of 2014,” the Frankfurt-based ECB said. “Among the largest countries, credit standards on loans to enterprises were eased in net terms particularly in Italy and to a more limited extent in France, while remaining unchanged in Germany and Spain and continuing to tighten in the Netherlands.”
While lending in the euro area has been contracting since May 2012, the pace has slowed in recent months. That may be a signal that unprecedented monetary stimulus from the ECB since last year, including asset purchases and long-term loans to banks, are starting to reach the real economy.
“Rising net loan demand continued to be reported in particular for loans to non-financial corporations and for consumer credit, while the reported increase in net demand for housing loans stabilized at elevated levels,” according to the report.
BTW, ISI’s company survey of Europe sales is showing signs of stabilizing at a low level after dropping sharply since June 2014.
China Growth Slowest in Decades China’s economic growth slipped to its weakest level in almost a quarter century in 2014, though growth in the final quarter came in higher than expected.
China’s economic growth slowed to 7.4% in 2014, downshifting to a level not seen in a quarter century and firmly marking the end of a high-growth heyday that buoyed global demand for everything from iron ore to designer handbags.
China’s economy grew 7.3% in the fourth quarter from a year earlier, the National Bureau of Statistics said, buttressed by targeted moves to ease borrowing. But it continued to face a housing glut, soaring debt and overcapacity in many industries, factors likely to erode growth in 2015. (…)
The often bullish International Monetary Fund on Monday forecast 6.8% growth for China in 2015, a number below the 7.0% target economists expect Beijing to set. (…) Oxford Economics predicts 6.5% and says it expects this year will be the last time China’s growth exceeds 6%.
Industrial output and retail sales for December beat the median estimates of economists surveyed by Bloomberg News. While not enough to prevent China from recording the weakest annual expansion since 1990, the gains helped ensure gross domestic product growth of 7.4 percent for 2014 — in line with PremierLi Keqiang’s target. (…)
GDP climbed 7.3 percent in the three months through December from a year earlier, compared with the median estimate of 7.2 percent. Bloomberg’s monthly GDP tracker rose to 7.07 percent in December, according to an initial reading, snapping four months of sub-7 percent levels.
China’s economic structure continued a gradual adjustment, with consumption contributing 51.2 percent of the GDP growth last year, up 3 percentage points from a year earlier. Services made up 48.2 percent of the economy, up 1.3 percentage points. (…)
BTW, ISI’s company survey of China sales continues to weaken.
China’s Slower Economy Still Working for Jobs While China’s economy slowed, job creation has held up better than expected, explaining Beijing’s reluctance to push through more stimulus than it already has.
Along with the GDP data, the government released a rarely seen unemployment ratethat’s usually only available to government officials. It came in at 5.1% in December, only a tick higher than the 5% rate the last time the number slipped out in August.
A separate official labor survey showed there were 115 jobs for every 100 applicants in the last quarter of the year, a record high, indicating robust demand for labor. (…)
Inventories of unsold apartments nationwide continued to swell in December, breaching 400 million square meters. But inventory growth ebbed for the first time in a year, a sign that recent price cuts by developers are working, at least in some cities. Prices, meanwhile, are still falling, but at a slower pace than before.
It’s unlikely that developers, who are still holding so much inventory, will take a stabilization in prices as a signal to turn the construction cranes back on. Property fixed-asset investment grew at just 5.6% in the fourth quarter compared with a year earlier, according to Bank of America-Merrill Lynch.
IMF cuts forecasts for global growth Cheap oil not enough to dispel gloom over economic prospects
In a sign of its increasing gloom about the medium-term economic outlook, the IMF cut its global economic growth forecasts by 0.3 percentage points for both 2015 and 2016, despite believing cheaper oil represents a “shot in the arm”.
Having incorporated the 55 per cent decline in oil prices since September, a rise in the value of the dollar and these weaker medium-term prospects, the IMF believes the world economy will grow 3.5 per cent in 2015 and 3.7 per cent in 2016.
The fund downgraded its growth forecast for China by 0.5 percentage points next year which, if realised, would leave its economy growing more slowly than India’s. The fund thinks the country’s economy will expand 6.8 per cent in 2015 and 6.3 per cent in 2016.
As well as China, there were big downgrades to the growth forecasts for Russia, Brazil, the Middle East and Africa.
Russia is set for a deep recession, with a contraction of 3 per cent forecast this year and 1 per cent next, according to the fund. More than 1 percentage point has been sliced from Brazil’s forecast growth rate this year, with Latin America’s largest economy likely to expand only 0.3 per cent in 2015 and 1.5 per cent next year, the IMF believes.
Compared with these large downgrades, the 0.2 and 0.3 percentage point cuts to the eurozone forecast for this year and next are relatively minor. They are based on the European Central Bank introducing quantitative easing this week.
The US and Spain enjoyed the largest uplift to their forecasts, with the US, the world’s most important economy, expected to expand 3.6 per cent in 2015 and 3.3 per cent in 2016.
Economic growth in the grouping will slow to 1.8 percent, compared with an estimate of 2.6 percent in October, the London-based bank said in a report yesterday. Russia’s gross domestic product may shrink 3.5 percent, compared with an October forecast of a 1 percent contraction, the bank said.
Saudi Arabia, the world’s biggest oil exporter, may post a budget deficit at 11 percent of gross domestic product this year, HSBC said. In October, the bank projected that the kingdom would post a surplus.
The Saudi economy may grow 2.8 percent this year, HSBC said, the slowest pace since 2009. Economic growth in the United Arab Emirates, the second-biggest Arab economy, will slow to 3.1 percent this year from an estimated 4.9 percent in 2014.
HSBC’s forecasts are based on an average oil price “in the low $60s” this year and next, Williams said.
Calgary home sales slid 37% y/y in January as buyers have moved abruptly to the sidelines, while those thinking of selling are trying to do so in a hurry—new listings were up 32% from a year ago. That, of course, is an ugly combination for prices, which have slipped 1.5% from a year ago. There are now more than 4,000 homes on the market in Calgary versus 2,500 a year ago, and let’s just say that buyers would need to put on a very brave face to step into the market at this point. That, plus the suddenly-elevated level of supply, suggests that this price correction is just getting started.
However, the story is much different in Toronto, where sales as of mid-January were up a sturdy 9.8%, though average prices slipped 1.2%. The price dip likely reflects a shift in the sales mix as overall conditions look very balanced, if not tight in some areas—a few less high-priced transactions can skew the average transaction prices, especially in a relatively illiquid month like January. (BMO)
(…) Treasury yields keep hitting one low after another, a sign that some investors believe the broadening recovery could yet give way to a bout of deflation — the kind that hinders investment and spending — as oil tumbles and global growth deteriorates. One bond-market metric already suggests consumer prices will drop in the next year.
What’s happening in the $12.5 trillion market for Treasuries reflects a confluence of several powerful forces, not all of which necessarily spell doom for the U.S. economy.
The first is the plunging price of commodities, which may reflect greater doubt about the state of affairs outside the U.S. Crude oil has plummeted 54 percent since June, while copper slumped to its worst start to a year since 1988. The second boils down to risk and reward. When things look dicey, investors pile into Treasuries, driving down yields.
And even now, with yields on 10-year notes falling by the most on a year-to-date basis since the 1960s, they’re higher than more than a dozen countries including Germany, Canada and Italy. In Switzerland, benchmark yields have gone negative. (…)
Lower energy prices, far from helping Americans, will ultimately hurt the U.S. economy and send yields on Treasuries even lower this year, according to Jeffrey Gundlach, the co-founder of DoubleLine Capital, which oversees $64 billion.
While cheaper oil fueled growth at the end of 2014, the expansion may disappoint this year as spending and hiring in the energy industry dry up and cause a “ripple effect” in the economy, he said. (…)