World trade rose by 0.8% month on month in October, after a strong 5.4% increase in September, but it was still 13.2% below its peak of April 2008. Meanwhile, Bloomberg says a 26-mile-long line of idled oil tankers, enough to blockade the English Channel, may signal a 25% slump in freight rates next year.

Based on preliminary data, world trade volume expanded by 0.8% in October from the previous month, following an unprecedented increase of 5.4% in September, according to the CPB Netherlands Bureau for Economic Policy Analysis. Import volumes of the advanced economies declined in October, particularly in Japan. Import volumes of the emerging countries grew by 3.7% on average, extending the 6.9% increase in September. In October, world trade was still 13.2% below the peak level reached in April 2008 mainly resulting from the unprecedented drops in November 2008 up to January 2009.

Compared to last year world trade was down by 9.4% in October, but it was already 9.0% above the trough reached in May 2009. The CPB says monthly trade figures are volatile and focus on ‘momentum’ is therefore preferable.¹ In the three months up to October, world trade was up by 4.6% from the preceding three months, the highest momentum in our series starting at the beginning of the nineties.

World trade prices

World trade prices measured in US dollars increased by 1.6% in October relative to the previous month, mainly through higher energy and other commodity prices. But dollar prices of manufactures increased as well, partly explained by the fall of the effective exchange rate of the US dollar.

In the three months up to October, dollar prices of world trade were up by 3.7% from the preceding three months. This is the fifth consecutive month of rising price momentum, which contrasts sharply with strong price declines at the end of 2008.

World industrial production

On the basis of preliminary data, the CPB says world industrial production rose by 0.4% in October relative to the previous month, following a rise of 0.9% in September. Production in the advanced economies was slightly down, but the emerging markets powered on, especially in Asia. World industrial production is still 6.5% below the peak level reached in March 2008 and 2.4% down from October last year. However, it has risen continuously since the trough in March 2009 by an accumulated 6.4%.

In the three months up to October world industrial production was up 2.4% from the preceding three months, contrasting sharply with the record drop of 6.8% in the three months up to February 2009. Industrial production in Japan and the emerging economies in Asia has recovered strongly, following massive declines at the beginning of this year.

Frontline's Nordic Discovery

Bloomberg News reports that idle oil tankers will unload 26% of the crude and oil products they are storing in six months, adding to vessel supply and pushing rates for supertankers down to an average of $30,000 a day next year, compared with $40,212 now, according to the median estimate in a  survey of 15 analysts, traders and shipbrokers. That’s below what Frontline Ltd., the biggest operator of the ships, says it needs to break even.

An explanatory note on the CPB world trade series is available here.

The trade database is available in xls-format.

1 Momentum is the change in the three months average up to the current month relative to the average of the preceding three months period.