Finance Matters

Posts Tagged ‘GDP’

China’s official PMI rose to 53.3 in April, from 53.1 in March, staying well above the contractionary level of 50.

New orders eased to 54.5 from 55.1 the previous month, though new export orders climbed to 52.2, showing that the drop was driven by weaker domestic orders. 

Output climbed to 57.2 from 55.2 the previous month showing strong demand including the “restocking behavior by manufacturers”, according to Ting Lu, China economist for Bank of America-Merrill Lynch writes.

In his latest note Lu says he expects GDP to grow 8.5 percent year-over-year in the second quarter, from 8.1 percent in the first. He also says there are five key factors behind the overall economic growth:

1. Pro-growth policies.
2. Pent up demand for restocking by manufacturers.
3. The end of China’s coldest winter in 27 years.
4. A boost in infrastructure investment “after the settlement of political dusts (especially railway) and wrap up of local government reshuffling.”
5. Business confidence improved on account of some stability in China’s property sector and in global fundamentals.

Lu maintains his overall GDP growth forecast of 8.6 percent for 2012.

Don’t Miss: An Awesome Presentation On What Everyone Is Getting Wrong About China >

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We got an interesting research note yesterday from Deutsche Bank’s already bullish economics team.

From Chief U.S. Economist Joe Lavorgna:

We estimate that the economy expanded by +2.8% in Q1, but would not be surprised if growth tops 3% because of upside risks to consumption, namely from services and government spending. Our analysis suggests that defense spending in the last quarter may be greater than what we currently forecast. Inventory investment, which is always the biggest wildcard in forecasting GDP, is expected to increase $65 billion compared to a $52 billion increase in the previous quarter. Importantly, the projected inventory build is not particularly large and does not necessarily imply payback in the current quarter.

Economists are currently looking for 2.5 percent growth.

The Bureau of Economic Analysis will release the GDP report at 8:30 AM today.

SEE ALSO: The Best And Worst Economists Of 2011 >

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Just a quick reminder: Today’s huge number is Q1 GDP, which is coming out at 8:30 AM ET.

Generally projections have been ticking up for it, in part thanks to inventory boosts which may not last.

Here’s Nomura’s one-line forecast:

GDP, Q1 1st: We believe real GDP grew at an annualized pace of 2.8% in the first quarter of 2012, supported by strong business investment and consumer spending, growth in exports and inventory building that outweighed a drag from government spending.

Obviously we’ll have the news LIVE when it comes out.

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Provisional figures from the Office for National Statistics (ONS) show that the UK economy has contracted for two consecutive quarters, which means it has fallen back into recession.

The economy shrank by 0.3% in the fourth quarter of 2011 and the latest figures show a contraction of 0.2% in the first three months of 2012 after construction output fell sharply.

Production output fell by 0.4% and construction decreased by 3%, but there was slight growth, of 0.1%, in the service sector.

The ONS figures are estimated and could be revised in the coming months.

There was better news for the government yesterday with borrowing totalling £126bn in 2011-12, meeting targets.

This represents a significant decrease from £137bn in 2010-11, and from the record £159bn of borrowing under the Labour government.

However, there was a significant increase in borrowing to £18.2bn in March and an increase in the national debt to just over £1 trillion.

There is concern that borrowing may fall at a slower rate than anticipated in 2012 because of ongoing economic weakness and today’s news of a likely double-dip recession will reinforce these concerns.

Following the latest recession news the TUC’s General Secretary Brendan Barber released a statement suggesting the government’s austerity measures are not working.

“The government should look across the Atlantic and follow President Obama’s alternative that has reduced unemployment and brought growth back to the USA,” the statement said.

However the government said it was sticking to its austerity plan, despite the GDP figures.

An official spokesman for the Prime Minister David Cameron said: “The figures out this morning are disappointing but it is taking longer to recover, partly because we have suffered from the biggest debt crisis in our lifetime and partly because of what is happening elsewhere in the world, and in particular in Europe.

“The one thing that would make the situation even worse would be to abandon our plan and deliberately add more borrowing and add to debt.”

Earlier we mentioned a tweet from Doug Kass where he said that “frankly” the bears might be screwed.

The reason? It was all looking bad for the market a few days ago, but suddenly the bearish momentum has stopped. And if the bearish momentum can’t continue in this environment, then there’s really no hope for those on the short-side.

In a post up at RealMoney, Kass identifies 4 things that have changed.

1. Overall earnings and forward guidance were far better than many of the pessimists expected.
2. Apple remains a pivotal stock and an important contributor to aggregate corporate profits, and its blowout results cannot be overstated in consequence and on investor sentiment.
3. The general concerns regarding domestic economic weakness might have been overstated — my baseline expectation of a muddle-through 2% real GDP trajectory still seems likely.
4. Lower market prices began to discount the known economic and market headwinds and threats.

The full (gated) RealMoney post is here >

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