|As a member of the L.A. Area Chamber's Global Initiatives Council, we are pleased to provide you with the first edition of our monthly "Trade Intelligence Brief," which will provide a quick snapshot on news items and topics that effect the international business community. We trust that this overview will help you keep on top of the fast changing world we face. In addition, you can further follow-up on news items of special interest by clicking on the headings. This is part of our effort to provide you with the tools to access relevant trade information this year.
monetary tightening taking effect:
Money supply (M2) growth slowed down to a 30 month low of 15.1
percent missing forecasts of 15.4 percent. Banks are extending fewer loans and
are down 12.5 percent YTD. The decrease isn’t due to lower demand but the
central bank’s tightening policy. The central bank has raised interest rates
twice this year and bank reserve requirements five times. Inflation is a top
priority for Beijing which is at 5.5 percent. A decrease in M2 increases
interest rates resulting in lower economic activity and deflation can result.
Chinese firms will begin to demand less which will impact commodity prices.
import prices rise 0.2 percent in May:
Economists predicted a 0.7 percent decrease. Import prices for
May year-to-year are 12.5 percent higher. The price index increase resulted
from the rise in oil prices. Since oil is priced in dollars a weaker dollar
translates into higher oil prices. In addition, growing demand from Asia and
rising commodity prices are pushing up the costs of business.
Global manufacturing fell in May: The Purchasing Managers Index (PMI) for the United States fell from 60.4 in April to 53.5 in May missing economists’ expectations of 57.7. China’s PMI fell from 52.9 in April to 52 in May but was higher than the expected drop to 51.6. However, China’s PMI has seasonal patterns of decreasing in May but the markets will still overreact. The Eurozone’s PMI went from 58 in April to 54.6 in May. The PMI is an indicator of economic health and usually sets the tone for the next month’s economic expectations.United States signs telecommunications agreement with Mexico: U.S. manufacturers no longer have to do redundant testing in Mexico to prove telecommunications products meet the country’s technical requirements. Mexico will allow recognized American testing facilities to test products in the US and certify they meet Mexican standards.
|Compiled by: Kevin Bell, Global Initiatives Research Intern
For more information, contact Jasmin Sakai-Gonzalez, 213.580.7569.