Lately, the stock market has weakened with commodities been getting crushed.
Is the global economy slowing down hard? Maybe.
Recent U.S. economic data especially in housing has been disappointing.
And growth in China, a global growth engine, has slowed as it continues to crack down on corruption, property prices, and shadow banking. Its plan to shift its economy from exports to domestic-demand-powered growth has also added to the lower growth rate.
In Germany, Europe’s so-called strong-arm, economic hopes fall.
Let us briefly consider some salient data arising around the globe:
Housing, considered a huge source part of the economic recovery, is also showing signs of faltering. Building permits are decreasing and so is homebuilder confidence while foreclosure procedures are up and capacity limitations among mortgage lenders are also affecting the initial rebound.
America’s manufacturing rebirth also seems off-target. The Empire Fed manufacturing survey went down to 3.05 in April, below expectations. Today, we saw the April Philly Fed fall to 1.3, with the unemployment sub-index going down to -6.8.
In March, retail sales suddenly fell 0.4%. Nomura explained that the decreasing trends in sales in the last two months meant that “consumer adjustment to lower disposable income at the start of the year has begun.” Consumer confidence also missed the mark, falling to 72.3 in April, from 78.6 in March.
Reports regarding employment showed that only 88,000 new jobs were created in March, way below the expected 190,000 goal. The unemployment rate fell to 7.6% only because of a slow down in the rate of labor-force participation.
Topping this somber picture is the sequester, which has just started to move.
Chinese GDP fell down to 7.7% in Q1, missing the 8% growth target. Industrial production, manufacturing (as represented through PMI) and exports, likewise, did not make the grade.
The government’s campaign against corruption through ‘gift giving’ has affected retail sales, especially in the catering industry.
Latest surveys also indicated that home prices in China went up in 68 of 70 cities. Top-ranking cities posted a huge rise in home prices. Policymakers will most likely maintain the stringent measures to control the rise in property prices and shadow-banking.
Final assessment: The three major economic regions show clear signs of instability.
Germany showed some positive signs; but economic sentiment fell down to 42.
In the United Kingdom, joblessness increased by 70,000 to 2.56 million from December through February. Unemployment rate increased to 7.9%. Moreover, retail sales, including fuels, fell 0.7% within March, and 0.5% within the year. And next week’s GDP data will show if the U.K. has entered a triple-dip recession.
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