March 28, 2024

China Reports Increase in Manufacturing

HONG KONG — A manufacturing index published by the Chinese authorities on Thursday provided an unexpectedly solid reading for July but did little to dispel the picture of an economy that has left the days of double-digit growth well behind it.

The reading, published by the National Bureau of Statistics, edged up slightly, to 50.3 from 50.1 in June, indicating that recent small-scale economic support measures announced by the authorities in Beijing may be having some effect on demand.

The slight increase confounded analyst expectations that the index would slip below the 50-point mark that separates expansion from contraction.

Underlining the lingering malaise within the world’s second-largest economy, however, a separate manufacturing activity gauge published by the British bank HSBC came in at an eleven-month low of 47.7. The figure, which was unchanged from the initial reading published last month, highlighted the tough domestic and international demand that many Chinese companies are confronted with.

“With weak demand from both domestic and external markets, the cooling manufacturing sector continued to weigh on employment,” said Qu Hongbin, chief China economist at HSBC, in a statement accompanying the release.

On the upside, he noted, the string of recent weak data has prompted Beijing to introduce more targeted support measures, which “should boost confidence and reduce downside risks to growth.”

The leadership that took the helm in Beijing in March has been insisting that the slowdown is not only desirable — as part of their efforts to rein in excessive lending and bring about more balanced growth — but also stable and sufficient to meet its target of 7.5 percent this year.

But it has also prescribed a steady stream of small-scale, targeted support measures in a bid to ensure that growth does not cool too rapidly.

These have included tax cuts for small and micro enterprises and measures aimed at speeding up railway construction in inland and poor areas. In a bid to raise the economy’s overall efficiency the authorities have also issued instructions to more than 1,400 companies in 19 industries to cut excess production capacity this year.

Meanwhile, the central bank on July 19 said it would no longer set a minimum interest rate for corporate loans – a symbolically important first step toward wider interest rate liberalization.

“All of these things amount to a small-scale stimulus,” said Dariusz Kowalczyk, a senior economist and strategist at Crédit Agricole in Hong Kong. These steps, combined with more fine-tuning moves that are likely to follow in the next few months, are likely to lift economic growth to just above the official 7.5 percent growth target this year, Mr. Kowalczyk said.

“The new leadership cannot afford politically to miss that target during their first year,” he said, adding that he expected moves aimed at spurring consumer demand, such as subsidies for big-ticket items or consumption-tax cuts, as well as a modest depreciation in the renminbi in the coming months.

Article source: http://www.nytimes.com/2013/08/02/business/global/chinese-manufacturing-unexpectedly-strengthens.html?partner=rss&emc=rss

Greeks Stage General Strike Against Austerity

The Greek protest came as workers in Asia, including Bangladeshis infuriated by the lethal collapse of a garment factory, demonstrated in cities including the capitals of Cambodia, Indonesia and the Philippines. In Istanbul, riot police officers sprayed throngs of people with water and tear gas as they gathered for a rally, defying an official ban.

Labor unions in Spain called for rallies in more than 80 cities, news reports said, while protests were also scheduled in Portugal. In France, the bitterly divided labor movement called for hundreds of demonstrations across the country, with rival union confederations holding separate marches.

But, initial reports said, most protests went off quietly, including those in Athens.

On the streets of Paris, the far-right National Front, led by Marine Le Pen, held its annual May 1 march through the city center, seeking to draw support from disaffected voters at a time when French growth has faltered, unemployment is at record levels and the Socialist government is caught between demands from the right for greater cuts in public spending and complaints from the left that it is not socialist enough.

Ms. Le Pen’s supporters waved French red, white and blue flags outside the Palais Garnier opera house in central Paris. She said the country was “sinking in an absurd policy of endless austerity.”

Inveighing against the influence of big business, the European Union in general and Germany in particular, she ascribed French woes to “always saying yes to Brussels; to Berlin, of course; and in all circumstances to the magnates of high finance.” The crowd seemed smaller than it was a year ago, when the country was seized with election fever. Since then, however, many Europeans have sensed a deepening malaise with no prospect of a rapid return to a sense of well-being.

Such are Europe’s woes that the newly elected Pope Francis urged business and political leaders on Wednesday to do more to create jobs.

“And here I think of the difficulties that, in various countries, today afflict the world of work and businesses,” he told tens of thousands of people gathered for his weekly general audience in St. Peter’s Square in Vatican City.

“I think of how many, and not just young people, are unemployed, many times due to a purely economic conception of society, which seeks selfish profit, beyond the parameters of social justice,” the pope said. “I wish to extend an invitation to solidarity to everyone, and I would like to encourage those in public office to make every effort to give new impetus to employment.”

The nationwide walkout in Greece was called by the country’s two main labor unions, which represent two and a half million workers and have led resistance to three years of economic reforms that have cut salaries and pensions while increasing taxes.

With public anger giving way to resignation after a seemingly inexorable cycle of belt tightening in exchange for foreign rescue loans, the unions called for mass participation in the strike to protest “a catastrophic austerity drive” that has driven unemployment above 27 percent — the highest rate in the European Union — and to slightly less than 60 percent among those younger than 25.

The unions’ appeal failed to draw a large crowd, however, with about 10,000 Greeks taking to the streets of the capital, according to police estimates, for a demonstration that was both peaceful and one of the smallest in recent months. “There were no problems,” a police spokesman said as roads reopened to traffic and municipal garbage trucks swept discarded protest leaflets and coffee cups.

Although the strike brought much of Greek daily life to a halt on Wednesday, public transit services were running on a limited basis to allow Greeks to join rallies. In Athens, as in other major cities, police units were out in force to guard against violence that has marred demonstrations near the Parliament building in the past.

Ferries remained in ports and trains in depots, but flights operated normally because air traffic controllers did not join the strike.

The strike came just a few days after officials in the euro zone approved the release of 2.8 billion euros, or $3.7 billion, in rescue financing for Greece after Parliament ratified a new raft of economic reforms, including a politically contentious decision to lay off 15,000 civil servants by the end of next year.

The financing had been due in March but was delayed after talks between the government and officials of Greece’s troika of foreign lenders — the European Commission, the European Central Bank and the International Monetary Fund — broke down over the troika’s demands for the civil service cuts.

The country’s governing coalition, which has come under strain as it pushes its painful austerity agenda, must now enforce agreed-upon reforms, laying off 2,000 civil servants by the end of June and pushing forward a stalled project to privatize state assets. It faces strong opposition by its main political rival, the leftist party Syriza, which wants Greece to renege on its loan agreement with the troika and is neck and neck in opinion polls with the conservative New Democracy, the head of the shaky three-party coalition.

The European Union and the International Monetary Fund have extended to Greece two foreign bailouts worth $317 billion over the past three years, meting out the aid in installments in exchange for austerity measures and reforms.

Niki Kitsantonis reported from Athens, and Alan Cowell from Paris. Elisabetta Povoledo contributed reporting from Rome.

This article has been revised to reflect the following correction:

Correction: May 1, 2013

An earlier version of this article overstated the effect of the worker strike in Greece. Schools were already closed for the Greek Orthodox Easter break; they did not close because of the strike.

Article source: http://www.nytimes.com/2013/05/02/world/europe/greeks-stage-general-strike-against-austerity.html?partner=rss&emc=rss

O.E.C.D. Says Growth in Developed Countries to Accelerate

PARIS — Economic growth among developed nations is likely to accelerate in the first half of this year as strength in the United States and Japan help to compensate for the continuing malaise in Europe, the Organization for Economic Cooperation and Development said Thursday.

“The global economy weakened in late 2012 but the outlook is now improving for O.E.C.D. economies,” the organization’s chief economist, Pier Carlo Padoan, said in the report.

The Group of 7 industrialized nations alone will grow at an annualized 2.4 percent in the first quarter and 1.8 percent in the second, the report estimated. G-7 nations shrank by 0.5 percent overall in the fourth quarter of 2012.

Mr. Padoan said “bold policy action,” particularly from the monetary authorities, was still needed to ensure growth, particularly in Europe.

The O.E.C.D., which is based in Paris, forecast that the U.S. economy would rebound in the first quarter to grow 3.5 percent on an annualized basis from the last three months of 2012, when growth was just 0.1 percent. The U.S. economy also appears to be on track for second-quarter growth of around 2.0 percent, the report said.

Japan, which under its new prime minister, Shinzo Abe, has committed to attacking deflation with all the resources at its disposal, will rebound to 3.2 percent growth in the first quarter of 2013 and 2.2 percent in the second quarter, the organization said. Japan’s economy grew just 0.2 percent in the October-December period.

But for Europe, hobbled by the seemingly endless euro crisis and budget-balancing measures, as well as joblessness and weak demand, “a meaningful recovery is likely to take somewhat longer,” the organization said. It predicted there would be a decided divergence between the economy of Germany, which is forecast to rebound strongly in the first half, and the rest of the region, which “will remain slow or negative.”

It predicted that Germany would post first-quarter growth of 2.3 percent, accelerating to 2.6 percent growth in the second quarter. The German economy shrank 2.3 percent in the last three months of 2012.

France, the second-largest euro zone member after Germany, will probably remain moribund, the report said, shrinking by about 0.6 percent in the first quarter before eking out 0.5 percent growth in the April-June period. The French economy shrank 1.2 percent in the fourth quarter.

Britain will manage first-quarter growth of 0.5 percent and 1.4 percent in the second quarter, after slipping 1.2 percent in the fourth quarter of last year, the report said.

The organization said growth from developing nations would continue to outpace the advanced economies, with China alone expected to simmer along at a level “well above 8 percent” in the first six months of the year.

Noting the still-fragile state of confidence and widespread unemployment, “bold policy action to support activity remains necessary in all major O.E.C.D. economies,” Mr. Padoan said. Given tight government finances, monetary policy remains a key instrument for supporting demand,” adding, “even though monetary stimulus may not always be sufficient and carries its own risks.”

Jacques Cailloux, chief European economist at Nomura in London, said that the O.E.C.D.’s overall forecasts appeared to be “considerably” more optimistic than most private forecasters were expecting.

“For the U.S., Japan and Germany the first half looks to be very strong,” he said.

Mr. Cailloux also said he expected the 17-nation euro zone economy to decline about 0.8 percent in 2013 from a year earlier, and that – so far, anyway – the boiling crisis in Cyprus had not led him to downgrade that already dismal view.

“Our forecast assumed some pretty large shocks and uncertainty,” he said. “Obviously Cyprus is a shock, it’s greater than we expected, but so far it hasn’t affected our broader outlook.”

Article source: http://www.nytimes.com/2013/03/29/business/global/oecd-says-growth-in-developed-countries-to-accelerate.html?partner=rss&emc=rss