Quiet Ports Spur Slowdown Fears America’s busiest ports reported a decline in imports during the key peak shipping season for the first time in at least a decade.
For the first time in at least a decade, imports fell in both September and October at each of the three busiest U.S. seaports, according to data from trade researcher Zepol Corp. analyzed by The Wall Street Journal. Combined, imports at the container terminals at the ports of Los Angeles, Long Beach, Calif. and around New York harbor, which handle just over half of the goods entering the country by sea, fell by just over 10% between August and October. (…)
Some say the slump is being driven by businesses that have cut back on imports because of a weak economic outlook, which could point to sluggish global growth ahead. Others say it is a side effect of a massive inventory buildup that took place earlier in the year.
Despite the weak peak, imports in the first 10 months of the year at the nation’s busiest ports are still up 4% from a year earlier, Zepol data show. Rather than ordering huge shipments of goods in the late summer and early fall, more businesses are stocking up throughout the year and holding on to inventories for longer. (…)
Last week, the consumer goods-focused ports of Long Beach, Calif. and Oakland, Calif., both reported year-to-year declines in imports in October, another sign that retailers have scaled back their orders from overseas after seeing inventories pile up earlier in the year. (…)
There clearly is an inventory correction going on.
Businesses Are Stockpiling. What Does It Mean?
In September, overall business sales were flat but inventories climbed 0.3%. That pushed the inventory-to-sales ratio to its highest level since the waning months of the recession, the Commerce Department said on Friday.
If they keep piling up, outsized inventories could even be a harbinger of economic slowdown or recession. (…)
What’s driving the surge in inventories? It’s mostly retailers, which includes auto dealers, but manufacturers’ and wholesalers’ inventories also have been creeping up. But the figures aren’t wildly out of line with prerecession norms. (…)
Consumer Sentiment Climbs as Americans Buoyed by Price Discounts
The University of Michigan’s preliminary consumer sentiment index for this month rose to 93.1, a four-month high, from 90 in October, a report showed Friday.
The gain in confidence was propelled by those in the bottom two-thirds of the pay scale as a firming job market and cheap fuel costs made for the most-favorable income expectations in almost nine years. That bodes well for the holiday-shopping season after retail sales were weaker than projected last month.
“Confidence rose in early November mainly due to a stronger outlook for the domestic economy,” Richard Curtin, director of the Michigan Survey of Consumers, said in a statement. “Buying plans remained very favorable in early November due to low prices and currently low interest rates.”
The Michigan sentiment survey’s index of expectations six months from now increased to 85.6, a five-month high, from 82.1 in October. The gauge of current conditions, which measures Americans’ views of their personal finances, rose to 104.8, the highest since August, from 102.3 last month.
Japanese Economy Contracts Again Japan’s economy shrank again in the third quarter, entering a second technical recession in two years.
(…) Gross domestic product—the broadest measure of a nation’s economic activity—shrank at an annualized pace of 0.8% in the July-September period from the previous quarter, government data showed Monday. That followed a revised 0.7% contraction in the second quarter. (…)
A drop in inventories cut 2.1 percentage points from total growth, outstripping positive contributions from private consumption and exports. That could turn into a positive in coming months, though. When inventories are low, companies usually increase output, leading to faster growth in subsequent quarters.
Business investment shrank an annualized 5.0% during the quarter, a second-straight decline, as a global slowdown weighed on corporate earnings. (…)
Private consumption, which accounts for some 60% of Japan’s GDP, grew 2.1% after contracting 2.3% in the previous quarter. But few economists see this as heralding a sustained recovery. Sluggish wage growth continues to burden consumer sentiment. (…)
Thai Economy Turns a Corner as Junta Starts to Boost Investment
Gross domestic product expanded 1 percent in the three months through September from the previous quarter, the National Economic and Social Development Board said in Bangkok Monday. That compares with the 0.6 percent median estimate in a Bloomberg News survey of 20 analysts. GDP climbed 2.9 percent from a year earlier, more than the median forecast of 2.5 percent in a separate survey. (…)
The agency predicts GDP growth this year will be 2.9 percent, the fastest in three years.
Annual inflation up to 0.1% in the euro area
Trivia question: What was the annualized rate of core inflation in the Euro area during the last 3 months:
- 0.0%
- –1.0%
- +0.7%
- +4.1%
Hint for you: Just last week, European Central Bank President Mario Draghi expressed concern that core inflation in the eurozone may be backsliding.
The right answer is 4: +4.06% with the last 3 months being +0.3%, +0.5% and +0.2% MoM respectively.
True, if you add July’s –0.7% print, core inflation is back to tame area. But then, maybe, we should add February to June which was +5.8% annualized. But add January’s –1.8% and first half core inflation is but +1.2%.
In all, first 10 months of 2015: two big down months (Jan. and July), three big up months and five so-so months. Total first 10 months annualized: +1.1%.
Erratic. But certainly not “backsliding”. In fact, November-December better be quiet on that front…
Lagarde: Yuan Should Be IMF Reserve Currency China’s yuan should be included in the elite basket of currencies that comprise the International Monetary Fund’s lending reserves, IMF head Christine Lagarde said.
Yuan Set to Join IMF Basket in Step Toward Currency Big Leagues
Oil Slump May Prompt U.A.E. Spending Cuts, Central Bank Says
The United Arab Emirates may cut government spending as a result of the slump in oil prices, Central Bank Governor Mubarak Rashed Al Mansoori said.
The decline in the government’s oil revenue “may trigger further fiscal consolidation, albeit at a gradual pace, to preserve priority spending in support of non-oil growth,” Al Mansoori said at a conference in Dubai on Monday. Oil accounted for almost a third of the nation’s gross domestic product last year, government data show.