Business leaders have painted a bleak picture of the UK economy, with a survey suggesting a "frightening deterioration" towards the end of 2008.UK Retailers Worst December In 14 Years
The BCC report, based on a survey of almost 6,000 firms which employ 680,000 people, pointed to plunging domestic demand, falling exports and plummeting confidence in the last three months of 2008.
"It is clear that the UK economy is facing a very serious recession, and the downturn is deepening at an alarming pace," said the BCC report based on a survey of almost 6,000 firms which employ 680,000 people.
"The results highlight a frightening deterioration in the UK economic situation."
Its latest survey - which covered the last three months of 2008 - showed "no positive features" it added, with both the manufacturing and service sectors worsening.
As in the U.S. a late Christmas rush never emerged and U.K. retailers saw worst December in 14 years
The Christmas rush came too late to prevent British retailers from experiencing the worst December in at least 14 years, the British Retail Consortium said Tuesday.BCC Says "Situation Is Dire"
The group's monthly survey found a 3.3% decline in retail sales values on a same-store basis and an overall sales drop of 1.4% compared to December 2007. Both measures marked the worst December readings since the BRC launched its survey 14 years ago.
"These are truly dreadful numbers," said Stephen Robertson, BRC director-general, in a statement. "Some retailers were more successful than others and the second half of December was better than the first. But overall the food sector was almost the only one to show growth. And even this was at the slowest rate since last March."
The managing director of the BCC says it's a "Dire Situation, Monetary Policy Out Of Bullets
The British economy slumped the most in at least two decades during the fourth quarter and home sales dropped to the lowest since the measure began in 1978 as the recession deepened, reports by lobby groups showed.Falling Exports In Germany
The British Chambers of Commerce�s survey of almost 6,000 companies showed the weakest results since it started in 1989, the London-based group said today. The average number of home sales per surveyor slipped and retail sales had the worst December in 14 years, reports by the Royal Institution of Chartered Surveyors and British Retail Consortium showed.
The Bank of England reduced the benchmark interest rate to 1.5 percent last week, the lowest in the bank�s history [Mish Note: This is the lowest dating back to 1694].
Prime Minister Gordon Brown yesterday promised 500 million pounds ($745 million) to encourage hiring and pledged to help thaw lending as Britain faces its first recession since 1991.
�This recession is worse than in the 1990s,� David Frost, managing director of the BCC, told journalists at a briefing yesterday. �The situation is dire, and the Monetary Policy Committee is running out of bullets.�
With rising concern about jobs and exports Germany agrees 50bn euro stimulus
Germany's coalition government has agreed an economic stimulus package worth about 50bn euros ($67bn; �45bn), senior ministers have said. A 23bn euros plan, passed last month, was derided for being too cautious. The initiatives include investments in railways, roads and schools, as well as a number of tax relief measures.N.Z. Business Confidence Slumps
"All in all, it is a package that will help get us through the financial crisis and secure jobs," said Christian Democrat parliamentary president Volker Kauder.
Due to the global economic downturn, there is less demand abroad for German goods, such as cars and machine tools. Germany is heavily reliant on exports, which saw their largest fall in November since reunification in 1990.
Last year it unveiled a bail-out for businesses worth up to 500bn euros but its use has been limited due to strict conditions attached to taking the money.
Bloomberg is reporting New Zealand Business Confidence Slumps on Global Outlook.
New Zealand businesses grew more pessimistic about the economic outlook and their own earnings as the world�s largest economies slumped into recession, curbing exports and consumer spending.Japan Exports Slump By Record Amount
A net 64 percent of companies surveyed last quarter expect the economy will worsen over the next six months, the New Zealand Institute of Economic Research said today in Wellington. That is more than three times the 19 percent that forecast a deterioration in the third quarter. The net figure is calculated by subtracting the pessimists from optimists.
New Zealand is in its first recession in 10 years as a global economic slowdown curbs business investment and consumer spending. The government, which last month said the economy may not start expanding steadily until 2010, plans to cut income taxes and spend more on roads and schools to spark demand.
�The sheer scale and sharpness of the deterioration is difficult to ignore,� the institute said in today�s report. �Marked declines in employment and investment intentions in particular suggest that economic growth may be softer for longer than previously expected.�
In the wake of a global recession Japan Current-Account Surplus Narrows 66%
Japan�s current-account surplus narrowed for a ninth month in November as exports slumped by a record in the wake of the global recession.Japan Corporate Bankruptcies Rose for Seventh Month
The surplus shrank 65.9 percent to 581.2 billion yen ($65 billion) from a year earlier, the Ministry of Finance said in Tokyo today. The median estimate of 24 economists surveyed by Bloomberg News was for the gap to narrow to 600 billion yen.
The yen�s 22 percent gain against the dollar in the past year is compounding exporters� woes and eroding the value of investments Japanese have overseas. Japan�s currency surged to a 13- year high of 87.14 on Dec. 17.
Exports plunged a record 26.7 percent in November from a year earlier on a customs cleared basis, the Finance Ministry said last month.
Bloomberg is reporting Japan Corporate Bankruptcies Rose for Seventh Month in December.
Japan�s corporate bankruptcies rose for a seventh month in December as the recession deepened. Bankruptcies climbed 24.1 percent from a year earlier to 1,362 cases, Tokyo Shoko Research Ltd. said in Tokyo today. A total of 33 publicly traded companies went out of business in 2008, the most in the postwar period, the report said.Philippine Exports Fall for Second Straight Month
More companies are finding it difficult to survive as a credit crunch makes it harder for them to raise funds. The Bank of Japan last month said it would buy commercial paper for the first time to help alleviate the pressure on companies.
�Bankruptcies will keep rising,� said Masamichi Adachi, a senior economist at JPMorgan Chase & Co. in Tokyo. �We will see a further deterioration in the economy.�
With collapsing demand for technology Philippine Exports Fall for Second Straight Month
Philippine exports fell for a second consecutive month in November as the global recession damped demand for disk drives and mobile-phone chips made by Intel Corp. and other manufacturers in the country.Alcoa reports $1.19B loss in 4Q
Overseas sales dropped 11.9 percent to $3.49 billion from a year earlier, the National Statistics Office said in Manila today.
Exports to the U.S., the Philippines� biggest overseas market, dropped 19 percent to $609 million. Shipments to Japan, the No. 2 destination, fell 3.8 percent to $573 million. Exports to China declined 27 percent.
As ailing global economy erodes demand and prices Alcoa reports $1.19B loss in 4Q
In a dismal prelude to the earnings season, Alcoa Inc. reported a quarterly loss of $1.19 billion Monday, days after the aluminum giant announced cuts due to sinking prices and demand for the metal.China�s Exports Fall by Most Since 1999
Prices of the metal, used in everything from cars and aircraft to window frames and beer cans, have fallen steeply along with other commodities since mid-2008. Analysts don't expect a rebound before mid-2009.
To cope with diminishing demand, Alcoa last week announced plans to lay off about 13 percent of its global work force by the end of 2009, further reduce production and spending, and sell four of its subsidiaries. Alcoa said it expected to save $450 million annually as a result of the cutbacks.
"The aluminum industry is caught up in a perfect storm of historic proportions," Klaus Kleinfeld, Alcoa's president and chief executive, said in a conference call. "The price has never before fallen so fast. As demand disappears, inventories are building and prices are decreasing."
The company said the results were driven by a 35 percent price decline in the quarter -- a 56 percent decline from July -- and sharply lower demand, particularly from the automotive, commercial transportation and building and construction sectors.
Aluminum demand in the U.S., which accounts for about 18 percent of the global market, has been falling for months, pushed down by declines in the residential housing and automotive markets.
Prices of aluminum have plummeted to about 70 cents per pound from around $1.50 per pound last summer, as the global economy slowed and demand for the metal waned. Prices averaged about $1.17 per pound in 2006 and $1.20 per pound in 2007. Some analysts think prices won't hit bottom until mid-2009.
Shares of Alcoa sank 75 cents, or 6.9 percent, to close at $10.06. During the quarter, Alcoa's share price fell 47 percent, hitting its lowest level in more than a decade. In 2008, Alcoa shares shed nearly 70 percent of their value.
Premier Wen Jiabao Pledges Stimulus As China�s Exports Fall by Most Since 1999.
China�s exports fell the most in almost a decade in December as the deepening global recession cut demand for the nation�s toys, clothes and electronics. Shipments dropped 2.8 percent, the official China Daily said today. That compares with a 21.7 percent gain a year earlier.Hard Landing Summary
Waning export demand has led to protests by fired factory employees, an exodus of 600,000 migrant workers from the manufacturing hub of Guangdong, and an estimated urban unemployment rate of more than 9 percent. Premier Wen Jiabao pledged Jan. 11 to add to the nation�s 4 trillion yuan ($585 billion) stimulus package to create jobs and avoid social instability.
�There is little hope that exports will recover this year, as developed economies remain mired in recessions,� said Sun Mingchun, a Hong Kong-based economist at Nomura Holdings. �Textile, steel and electronic exports are the most badly hurt.�
Achieving the government�s 8 percent economic growth target for creating jobs and preventing social unrest will be �exceptionally arduous,� Liu Mingkang, the chairman of the China Banking Regulatory Commission, said in Beijing yesterday. Speaking in Switzerland, central bank Governor Zhou Xiaochuan said he too saw a risk of missing the goal.
- UK Retailers Worst December In 14 Years
- UK home sales lowest since the measure began in 1978
- UK interest rates lowest dating back to 1694
- Germany exports saw their largest fall in November since reunification in 1990.
- New Zealand is in its first recession in 10 years
- Philippines� exports plunge
- Alcoa reports $1.19B loss in 4Q
- Aluminum prices collapse to 70 cents per pound from around $1.50 per pound last summer
- Japan Corporate Bankruptcies Rose for Seventh Month
- Japan Exports Slump By Record Amount
- China�s Exports Fall by Most Since 1999
- Waning export demand has led to protests by fired factory employees, an exodus of 600,000 migrant workers from the manufacturing hub of Guangdong
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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