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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (13390)	10/14/2004 10:05:06 AM
From: mishedlo	Respond to of 116555

UK economic recovery ´faltering´ - BCC UPDATE Thursday, October 14, 2004 1:01:56 PM afxpress.com UK economic recovery 'faltering' - BCC UPDATE (Updating to add further comments from BCC news conference) LONDON (AFX) - The UK's economic recovery is "faltering" with confidence in both the manufacturing and service sectors on the wane, a leading business lobby group said In its quarterly economic survey, the British Chambers of Commerce noted a "disturbing" loss of confidence in both sectors as the business climate becomes more and more difficult in the wake of higher borrowing costs and an increasing regulatory and tax burden "We have a major concern that business confidence is falling in the service sector which has a vital role to play in sustaining economic activity and job creation," said David Frost, the BCC's director general. "Manufacturing performance is just about adequate, but given the recent poor official figures, the sector is also facing some very serious risks and challenges," he added He urged the Bank of England to rule out further interest rate hikes in the current climate and revealed that the BCC is likely to reduce its GDP growth forecasts in the wake of the survey's findings "The assumption that there must be further interest rate hikes should be questioned, although we are not ruling out that there may be a need for them in the future," said David Kern, the BCC's economic adviser A more detailed look at the survey found that the home sales balance in manufacturing fell slightly to +20 pct in the third quarter from +21 pct in the second quarter but that the home orders balance rose to +15 pct from +10 pct Meanwhile, the service sector's domestic balances fell markedly in the third quarter, from +38 pct in the second quarter to +30 pct The export sales balance for manufacturing was much more disappointing, falling 3 percentage points over the quarter to +12 pct, while the export orders balance fell 14 points to +7 pct In the service sector, the export balance rose 2 points to +13 pct, while export orders slipped 2 points to +10 pct However, confidence slipped for both sectors The manufacturing sector's net balance of turnover confidence fell five points to +38 pct, the lowest figure since the first quarter in 2003, while profitability confidence declined 11 points to +24 pct, again the lowest level since the first quarter of 2003 Meanwhile, the service sector's net balance of turnover confidence fell 12 points to +41 pct while profitability confidence dipped 12 points to +35 pct Both service confidence balances fell more sharply than for manufacturing, and were the lowest since the second quarter of 2003. "Overall, the Q3 results are not alarming, but they signal serious warnings," the BCC said The BCC's Frost told a news conference accompanying the release of the survey that many businesses are now finding themselves "trapped in the middle", suffering from heavy pressure on margins. Due to competition from countries such as China where production is much cheaper, businesses are unable to raise prices, but on the other hand costs are increasing, particularly due to higher commodity prices, he said [struggling to pass commodity prices on? yep - mish] Kern added that a stagnation in euro zone growth is of particular concern as it is the main market of most UK businesses, although those focusing on eastern Europe, where growth is more dynamic, are doing slightly better Another major worry for businesses at the moment is the increasing raft of employment regulation being imposed on them, such as family-friendly directives, the rise in the minimum wage and regulation on disabled access Any of these regulations on its own is manageable but it is the sheer numbers coming all at once is causing major problems, Frost said Excessive regulation could cause the UK to cease to be the strong economy it has been over recent years, Kern noted

To: russwinter who wrote (13390)	10/14/2004 10:09:09 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

U.S. trade gap widens sharply in Aug. on oil imports Thursday, October 14, 2004 12:45:39 PM afxpress.com WASHINGTON (AFX) -- The U.S. trade deficit widened by 6.9 percent in August to $54.0 billion, the Commerce Department said. This is the second highest trade gap on record and was above the consensus forecast of Wall Street economists of a deficit of $51.6 billion. Imports rose faster than exports in August. Much of the increase in the deficit came from a larger amount and higher cost of imported oil. The U.S. trade deficit with China widened to a record $15.4 billion in August compared with $11.7 billion in the same month last year ===================================================== Well judging from the reaction of treasuries and eurodollars the bond market is more concerned about jobs than PPI or trade gaps Mish

To: russwinter who wrote (13390)	10/14/2004 10:21:46 AM
From: mishedlo	Respond to of 116555

ECB says euro zone output growth broadly stable in Q3 Thursday, October 14, 2004 10:40:29 AM afxpress.com FRANKFURT (AFX) - The European Central Bank said euro zone output growth was probably broadly stable in the third quarter Industrial output excluding construction grew 2.7 pct year-on-year in the second quarter "Regarding the third quarter, surveys generally point to broadly stable growth in both manufacturing and services," the ECB said in its October monthly bulletin But it acknowledged that output growth is more likely to have slowed slightly than to have increased It said the manufacturing sector purchasing managers' index signals "ongoing, albeit slightly moderating, growth in manufacturing output" in the third quarter And surveys for the services sector point to growth "close to or somewhat below" the second quarter rate, it said Euro zone output rose 0.4 pct month-on-month in July, but Germany and France have both reported sharp falls in production in August. Euro zone data for August are due on Oct 19 Meanwhile, there is still no sign of a pick-up in consumer spending despite an improvement in consumer confidence, the ECB said "Recent developments in retail trade and new car registrations would not point to a significant strengthening of private consumption in the third quarter," it said Global economic growth seems to have gained some momentum in the third quarter after moderating in the summer, but in the months ahead growth is likely to stabilise at levels below those experienced earlier in the year, it said And there is still little evidence of a spillover from the recent oil price surge to other prices globally, it said But oil prices continue to pose some risks for both inflation and growth, with markets expecting them to remain near current levels for the remainder of the year and then decline only gradually The ECB reiterated its view that current oil prices contain a sizeable premium which is not related to fundamentals. This may reflect concerns about future supply disruptions, it said The latest oil price rise could put further upward pressure on euro zone inflation in the short term, but inflation should fall below 2 pct next year providing there are no further oil price shocks, it said The ECB noted that its favoured measure of core inflation, which excludes energy and unprocessed food, ticked up to 2.2 pct in August from 2.1 pct in July But it said this was not the result of "second round" effects from the oil price surge "This rise mainly reflects developments in the highly seasonal prices of garments and should thus not be seen as a sign of an indirect effect resulting from the recent increase in energy prices," it said But commodity price rises are putting upward pressure on producer prices, with producer price inflation reaching 3.1 pct in August and likely to increase further in the coming months However, it is not clear that this will feed through to consumer prices "Recent data on developments in earlier stages of the production process may point to some further upward pressures, but there is so far no clear sign of indirect effects from energy prices on consumer goods prices," the ECB said And labour cost indicators suggest that wage growth slowed to between 2.0 and 2.5 pct in the first half of the year, and unit labour costs remain well under control, it said Unit labour cost growth slowed to 1.0 pct year-on-year in the first quarter from 1.6 pct in the fourth quarter, and a further decline is likely in the second quarter, the ECB said "Looking ahead, continued moderate wage growth, due to the weakness in the labour market, combined with favourable labour productivity growth should lead to moderate growth rates in unit labour costs over the coming quarters," it added The ECB meanwhile sounded a note of caution about inflation expectations The inflation expectation built into government bond yields has edged up to around 2.2 pct in recent weeks, which is relatively high by historical standards, it said The ECB aims to keep long-term inflation expectations in line with its price stability goal of an inflation rate below but close to 2 pct And M3 money supply growth seems to be picking up again after the decline seen between mid-2003 and May 2004, it said The ECB said this seems to be because the dampening effect on M3 of the shift back into riskier assets after the Iraq war now seems to be waning. And the low level of interest rates seems to be boosting demand for cash and credit, it said