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China And US Data Boosts Markets

China started the new year with a surge in exports, imports and available credit. The results are welcomed by an anxious international community. The news comes with a warning that inflation may be looming in the world’s second biggest economy.

Exports – Registered 25 percent higher than in January 2012 surpassing analyst’s projections by a whopping 8 percent.

Imports – Spiked up 23.8 percent, 5.5 percent above projections.

Trade Surplus – The trade surplus in January came in at $29.2 billion, 7.2 percent above projections.

New Loans – January’s new loans came in at $172 billion, twice the volume of loans issued in December.

Social Financing – Social lending is a measure of liquidity and the January figure of 2.54 trillion yuan cruised past the December figure of 1.63 trillion yuan.

Economists approached these figure with caution suggesting that the impact of the Lunar New year may be partially responsible for the gains in year-over-year comparisons. Last year the Lunar New Year was celebrated in January. This year the holiday was in February.

China’s growth had suffered of late. After seven quarters of an economic slowdown, the pace began to pick up in the fourth quarter. While economists are cautious, the consensus is that China is in a solid recovery mode.

The rise in exports is especially gratifying. The majority of shipped products were sent to the US and to the European Union. Exports to the US increased by 14.5 percent over January 2012. EU exports rose by 5.2 percent, the highest rate in the last 13 months.

The January inflation rate shed 0.5 percent settling at 2.0 percent after moving to a seven-month high of 2.5 percent in December. Economists have predicted a 3.5 percent rise in inflation in China during 2013.

The People’s Bank of China explained its posture;”As the economy transits into another stage of growth, economic controls need to always emphasize containing inflation risks.” Food prices in January increased 2.9 percent.

China continues to provide many goods to the South East Asian Nations (ASEAN). In 2012, exports to these nations rose 48.6 percent to $20.1 billion.

US Revisions   

New data suggests that the US economy did not recede in the fourth quarter 2012. Original figures showed a contraction of 0.1 percent.

The US trade deficit closed the gap to the best level since 2009. In December, the export-import gap lowered to $38.5 billion, well below projections. In 2012, the US trade deficit fell by 3.5 percent to $540.4 billion.

Barclays reported that with changes to existing inventories and the new trade figures GDP expanded about 0.3 percent in the fourth quarter.

The US still imports more goods than it exports but areas where the country reduced imports are in the important petroleum sector. In 2012, the imports of petroleum fell to the lowest rate since 1997. In December, increased output of oil and gas and petroleum products increased by $1 billion establishing a new high standard.

The US also closed the gap between import and exports to China in December. As the US imported less, the gap closed by $4.5 billion. The Commerce Department reported that unsold wholesale products fell to 0.1 percent. Projections indicated a 0.4 percent rise.

On the news, the USD moved up against the euro to 1.3360.






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