China’s exports are rising
A container ship from Japan anchored in the Yangshan port of Shanghai. China’s trade growth picked up in May after anti-virus restrictions that shut down Shanghai and other industrial centers began to ease. Photography: Chen Jianli / AP
China’s exports have risen sharply, in an encouraging signal that supply chain bottlenecks caused by Covid-19 blockages may be declining.
Exports accelerated by 16.9% in May, year-on-year, well above the 3.9% growth in April, and twice as fast as expected.
This surpassed imports, which rose 4.1%, and raised China’s trade surplus to $ 78.8 billion during the month.
The jump in exports suggests that some of the disruptions that affected China’s ports earlier this year, amid blockades, are over.
This could help calm inflation, as these supply chain problems have helped increase the cost of imported goods.
However … the slowdown in economic growth could now mean less demand for Chinese products.
Wei Yao, Asia Pacific head of research and chief economist at Societe Generale, explained:
We’ve always thought that China could quickly resolve supply chain disruptions; this is even better than our optimistic view on this point.
“The question from here is demand: Western consumers continue to move from goods to services and are increasingly under pressure from inflation. External demand is likely to soften from here, which means that the recovery of domestic demand will be even more important but difficult given Zero Covid. “
January-May exports from China to ASEAN + 8.1% y / y to 2.37 trillion yuan🇪🇺EU, + 7% annually to 2.2 trillion yuan🇺🇸US +10.1 % y / y to 2 trillion yuan🇰🇷 South Korea +8.2% y / y to 0.971 trillion yuan # China # export # trade 🇨🇳 Thread 3 / n
– CN Wire (@Sino_Market) June 9, 2022
🇨🇳 # January-May imports from China (y / y): # IronOre -5.1% to 447 million tons, average price -28.1% to 789.6 yuan per ton #Crudeoil -1.7 % to 217 million tons, average price + 55.6% to 4,463 yuan per ton # Coal -13.6% to 95.96 million tons, average price + 105.3% to 1,018.2 yuan per ton # OOTT
– CN Wire (@Sino_Market) June 9, 2022
Poundland Owner: UK shoppers discount essential items
A Poundland store in Slough. Photo: Maureen McLean / REX / Shutterstock
Poundland discount group owner has reported that UK consumers are cutting back on essential purchases due to the cost-of-living crisis.
Pepco, which also manages the PEPCO and Dealz brands in Europe, reported that its customers in the UK were reducing their spending as rising inflation hit budgets.
In the latest financial results this morning, Pepco reports:
Specifically in the UK, the cost-of-living crisis has affected customers ’disposable income as they are reduced even in essential short-term purchases.
Our continued focus on reducing business costs means that we are able to offset some of our input inflation, which allows us to protect prices for all of our cost-conscious customers while absorbing some of our inflation. of inputs, as evidenced by the decrease in our gross margins.
Average weekly sales at PEPCO stores are up 13.7% from pre-Covid levels, he says, while in Poundland they are up just 4.3%.
The company notes that customers in the UK and other Western European markets have experienced a drop in real revenue:
While absolute levels of inflationary pressure are higher in Central and Eastern European markets, the degree of wage inflation compensates substantially in the short term.
In Western European markets, the sharp rise in inflation in an environment of stagnant wage growth has quickly led to absolutely lower consumer spending.
Pepco also reported that the invasion of Ukraine was “exacerbating the existing supply chain disruption and counter-inflationary winds,” while leading to an increase in customers in some of its markets in Eastern Europe.
The company increased its number of stores by almost 14%, from 3,246 to 3,696. Revenue rose 18.9% year-on-year in the six months to March 31, with a pre-tax profit increase of 28.5%.
Discount retailer Pepco, owned by Steinhoff (Pepco and Dealz in Europe and Poundland in the UK), grew its half-year revenue by 19% as it added 450 new stores.
“In the UK, the crisis in the cost of living has affected customers’ disposable income, as they are declining even on essential purchases.”
– Nick Hedley (@nickhedley) June 9, 2022
Updated at 08.52 BST
UK real estate agents report falling inquiries for new housing
Photo: Tim Ireland / PA
Demand from potential home buyers fell in May, which could be a sign that heat may be coming out of the housing market.
The Royal Institution of Chartered Surveyors (Rics) said property professionals reported that inquiries from new buyers fell in May, with a net balance of 7% reporting falls rather than increases.
This was a turnaround since April, when a balance of 8% of real estate agents reported increases in buyer inquiries rather than falls, ending an eight-month series of growing inquiries from new buyers.
This decline may show that lowering the cost of living and rising interest rates are affecting the housing market.
Over the next 12 months, a net balance of 24% of professionals expected sales to decline rather than increase.
Simon Rubinsohn, chief economist at RICS, said rising borrowing costs weighed on demand:
“The rising cost of mortgage financing coupled with growing concern about the economic outlook is not surprising that it has an impact, albeit a relatively modest one at the moment, on buyers’ activity in the sales market.
“Despite this, prices are expected to remain strong until 2023. But, as is often the case in these circumstances, the pressure is likely to be felt more visibly at transaction levels which are likely to slow down as the year is moving forward. “
RICS also found that demand for rental real estate remained high, meaning tenants are facing rising bills, with fewer rental properties reaching the market.
Rubinsohn explains:
New property rental guidelines continue to fall according to respondents to the survey, while demand is still very strong, making rental levels higher bids and more challenging for unskilled tenants. to compete for available stock.
These are the key points of the BCC’s forecast for the UK economy:
- The UK’s GDP growth forecast for 2022 is 3.5%, 0.6% in 2023 and 1.2% in 2024
- After 0.8% growth in the first quarter of 2022, quarter-on-quarter GDP growth is expected to stop with zero growth in the second quarter and third quarter, before a contraction of 0.2% in the fourth quarter of 2022.
- Household consumption is forecast to grow by 4% in 2022, by 0.6% in 2023 and by 1.2% in 2024.
- The business investment forecast is to grow by 1.8% in 2022 before falling by more than half to 0.8% in 2023, amid the end of the super-deduction and the increase in the tax on companies, and then rise to 1.5% in 2024.
- BCC expects export growth of 3% in 2022, 2.3% in 2023 and 1.6% in 2024, compared to 6.9% and -2.7% growth in imports and 1.7%
- BCC predicts a UK unemployment rate of 3.8% in 2022, 3.9% in 2023 and 2024
- CPI inflation is projected to reach 10% in the fourth quarter of 2022, before falling to 3.5% by the end of 2023. Inflation is projected to fall again to the 2% target of 2022. Bank of England in the fourth quarter of 2024.
- Official UK interest rates are expected to rise to 2% in 4Q 2022 and then to 3% in 4Q 2023, ending 2024 at the same level.
Introduction: UK growth ‘will stop’
Good morning and welcome to our continued coverage of business, the global economy and financial markets.
Storm clouds are piling up on the UK economy as rising inflation, weak business investment, rising taxes and global economic shocks affect growth.
The British economy is expected to stagnate this year, and even shrink slightly during the October-December quarter, as the economic outlook deteriorates and inflation reaches double-digit levels.
The latest forecasts from the British Chambers of Commerce show that quarter-on-quarter GDP is expected to remain flat with no growth expected in the second quarter and third quarter before contracting 0.2% in the fourth quarter.
Expectations for annual growth in 2022 of 3.5% are now less than half of the 7.5% growth recorded last year. And things will get worse, and growth is expected to slow sharply to 0.6% in 2023, before recovering slightly to 1.2% in 2024.
The BCC also cut its consumer spending forecast this year as a cost-of-living reduction is achieved and halved its business investment forecast by almost half.
The downgrade reflects increased political and economic uncertainty and rising cost pressures that are limiting the investment capacity of smaller businesses, he says.
Alex Veitch, director of policy at the British Chamber of Commerce, said:
“Our latest forecast indicates that headwinds facing the UK economy show few signs of slowing down with continued inflationary pressures and slow growth. The war in Ukraine came just as the UK was beginning a Covid recovery; putting more pressure on business profitability.
“The forecast for a fall in business investment is particularly worrying. It is vital that urgent action be taken here, and we are having constructive talks with the government on its review of capital bonuses and other policies to encourage business investment.
“With the forecast for inflation above wages, we are concerned about a fall in consumer spending that would further affect companies and hinder growth. We anticipate that if trends continue, inflation will only return to the Bank’s target rate. England in late 2024, which will mean a prolonged period of difficulty for the UK.
“In this context, the government needs to put in place stable and supportive policies to help companies get the UK out of this economic mess. Businesses need to be given the confidence to invest, only then will they be able to drive growth. that the economy desperately needs. “
Here is the whole story:
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