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The Conference Board Leading Economic Index (LEI)
for China, a composite measure of key economic indicators, increased 0.6% in July to 158.6 (2004 = 100), following a 0.9% increase in June and a 0.4% increase in May. Four of the six
components contributed positively to the index in July.
Jing Sima, economist for the Conference Board, a US research firm, said today:
“July’s increase in the
LEI for China signals a continuation of economic expansion through the end of
this year. However, the strength in leading indicators has been concentrated in
bank credit expansion and real estate investment so far this year, while the
one-off effect from improved consumer expectations in June abated in July.
Industrial output, employment, and consumer spending continued to drive the
rising trend in the CEI (Coincident Economic Index), tracking current conditions for China through July, but
their rate of growth has tapered off noticeably. Both the LEI and CEI for China
suggest that the rate of economic growth will be slower in 2011 than last year.”
The six components of LEI for China include:
Total Loans Issued by Financial Institutions (source: People’s Bank of China); 5000 Industry Enterprises Diffusion Index: Raw Materials Supply Index
(source: People’s Bank of China); NBS Manufacturing PMI Sub-Indices: PMI Supplier Deliveries (source: National
Bureau of Statistics); Consumer Expectations Index (source: National Bureau of Statistics); Total Floor Space Started (source: National Bureau of Statistics); NBS Manufacturing PMI Sub-Indices: Export Orders (source: National Bureau of
Economic View: IMF
warnings on growth prospects; Dermot
O’Leary, chief economist at Goodbody, comments -- "While some progress
seems to have been made in sanctioning the next tranche of aid to Greece – with
the Troika to make a full return to the country next week – the IMF gave the
sternest warning yet to European policymakers to get their 'act together' or
risk the situation spiralling out of control. The IMF Chief Economist Olivier
Blanchard warned that policymakers “do not have the luxury of time” as the
organisation pulled down its forecasts for the global economy.
The biggest cut in forecasts was for the US, but
even after a c. 1% reduction, the US economy is still expected to grow by 1.5%
this year and by 1.8% in 2012. The euro-area on the other hand is expected to
grow by 1.6% and 1.1% in 2011 and 2012, respectively (after growth downgrades of
0.4% and 0.6%). More worrying for the euro-area in our opinion is the obsession
with the goal of fiscal consolidation over everything else; despite the clear
signs of slowing growth recently, the mantra of fiscal consolidation has
continued and monetary policy has been tightened. In the US, President Obama has
already proposed a stimulus package while we will find out later today if the
Federal Reserve will introduce further monetary stimulus when it concludes its
With peripheral euro-zone economies like Ireland attempting to engineer
export-led recoveries, with varying degrees of success of course, lower growth
expectations are not a welcome prospect. In Ireland, export performance has been
excellent and we will get the latest update on these developments tomorrow when
the Q2 National Accounts data are released. For now, we are happy with our
forecasts for continued export-led recovery into 2012, but weaker prospects
abroad will undoubtedly put pressure on this view."
Greek default is not imminent:
Can Irish exports weather a global slowdown?
Conall Mac Coille, chief
economist ay Davy, commented - - "With Irish economic growth dependent on
exports, today's trade balance data should give a better picture of how the
export sector has performed in light of the slowdown in euro area and UK demand.
Exports continued to perform well in the first quarter, but we know that GDP
growth in Ireland's key trading partners slowed sharply in Q2.
Thus far, the monthly data suggest that export growth remained reasonably
robust in Q2. However, the monthly data were a very poor guide to final export
contributions to GDP growth in Q4 2010 and Q1 2011. So we will have to wait
until Thursday's Q2 GDP data to see how the export sector contributed to Irish
economic activity in the second quarter.
However, with economic sentiment and activity indicators slowing through Q3,
the key challenge for Irish exports may be a more severe slowdown in global
activity in the second half of 2011. Consumer and business confidence measures
tailed off very sharply as the European debt crisis intensified in July and the
negotiations to raise the US debt ceiling were followed by the ratings downgrade
of the US treasury.
In some respects, Ireland's export sector may be reasonably well placed to
weather a global slowdown. Chemicals and pharmaceutical products account for
around one-third of Irish exports. Foods, beverages and tobacco also account for
a reasonably high share of exports at 5.2% compared with other developed
economies. The importance of Irish services exports has grown in recent years,
to the point where they finally surpassed the size of the goods export sector in
the final quarter of 2010. Services exports are largely dominated by computer
services and business services, which account for 18.6% and 14.6% of total goods
and services exports respectively.
So a decomposition of the sectoral split of Irish exports suggests that they
are concentrated in highly specialised niche sectors that may do relatively well
if a global slowdown emerges. That said, Ireland's geographic exposure to the
euro area, the US and the UK means that demand for Irish exports is skewed
towards those economies where economic prospects are the most uncertain. With
Irish domestic demand likely to remain weak, developments in the export sector
remain crucial for the economy - - increasing the focus on today's trade data."
In New York Tuesday, the
Dow rose 8 points or 0.07% to 11,409.
The S&P 500 slid 0.17% and
the Nasdaq slipped 0.86%.
The MSCI Asia
Pacific Index rose 0.3% Wednesday.
Nikkei 225 rose 0.23%; China's Shanghai Composite added 2.64%; Australia's
S&P/ASX 200 rose 0.78% and the Bombay Stock Exchange Sensex 30 fell 0.33%
Europe, the Dow Jones Stoxx Europe 600 is down 0.65% in early trading
The ISEQ has dipped 0.78% in
is down 1.58%; Petroneft is up 4 cent or almost 12%.
Petroneft, the Dublin-listed company, said today that it has made another oil find at its
Licence 61 in the Tomsk Oblast in Russia.
The find came after drilling at North Varyakhskaya. Petroneft termed the oil
Hennigan of Goodbody says on Dargon Oil's production report issued this
morning: "Cumulative incremental production added year to date (including
B/150) is 21.3 kbopd compared to 22.5 kbopd added in 2010 and 20.3 kbopd in
2009. That means that Dragon has already breached the target of adding
incremental production in excess of 20.0 kbopd annually with the latest
commentary indicating a current production base in excess of 60 kbopd, implying
annual production growth of 27%."
The margin between the US
benchmark WTI (West Texas Intermediate) used on the New York Mercantile Exchange
and Brent is almost $24.
The US Energy department
recently said that growing volumes of Canadian crude oil imported into the
United States contributed to record-highstorage
levels at Cushing, Oklahomaof over 41m barrels at the end of March 2011 (86%
of working capacity at Cushing), and a price discount for WTI compared with
similar-quality world crudes such as Brent. A discount for WTI is expected to
persist until transportation bottlenecks impacting the movement of mid-continent
crude oil to the Gulf coast are relieved. Consequently, the projected US refiner
average acquisition cost of crude oil, which was about $2.70 per barrel below
WTI in 2010, is $1.60 per barrel above WTI in 2011 and $1.10 per barrel above
WTI in 2012.