|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
957.88 |
USD/Ton |
0.00% |
1/6/2016 |
|
VSF |
1915.75 |
USD/Ton |
0.00% |
1/6/2016 |
|
ASF |
1908.09 |
USD/Ton |
-0.20% |
1/6/2016 |
|
Polyester POY |
939.48 |
USD/Ton |
0.82% |
1/6/2016 |
|
Nylon FDY |
2268.25 |
USD/Ton |
0.00% |
1/6/2016 |
|
40D Spandex |
4904.32 |
USD/Ton |
0.00% |
1/6/2016 |
|
Nylon DTY |
1016.11 |
USD/Ton |
0.00% |
1/6/2016 |
|
Viscose Long Filament |
2528.79 |
USD/Ton |
0.00% |
1/6/2016 |
|
Polyester DTY |
5710.47 |
USD/Ton |
0.00% |
1/6/2016 |
|
Nylon POY |
1141.79 |
USD/Ton |
0.00% |
1/6/2016 |
|
Acrylic Top 3D |
2114.99 |
USD/Ton |
0.00% |
1/6/2016 |
|
Polyester FDY |
2095.83 |
USD/Ton |
0.00% |
1/6/2016 |
|
30S Spun Rayon Yarn |
2697.38 |
USD/Ton |
-0.56% |
1/6/2016 |
|
32S Polyester Yarn |
1524.94 |
USD/Ton |
0.00% |
1/6/2016 |
|
45S T/C Yarn |
2498.14 |
USD/Ton |
0.00% |
1/6/2016 |
|
45S Polyester Yarn |
1701.19 |
USD/Ton |
0.00% |
1/6/2016 |
|
T/C Yarn 65/35 32S |
2130.31 |
USD/Ton |
0.00% |
1/6/2016 |
|
40S Rayon Yarn |
2850.64 |
USD/Ton |
-0.53% |
1/6/2016 |
|
T/R Yarn 65/35 32S |
2452.16 |
USD/Ton |
0.00% |
1/6/2016 |
|
10S Denim Fabric |
1.07 |
USD/Meter |
0.00% |
1/6/2016 |
|
32S Twill Fabric |
0.90 |
USD/Meter |
0.00% |
1/6/2016 |
|
40S Combed Poplin |
0.97 |
USD/Meter |
0.00% |
1/6/2016 |
|
30S Rayon Fabric |
0.72 |
USD/Meter |
0.00% |
1/6/2016 |
|
45S T/C Fabric |
0.74 |
USD/Meter |
0.00% |
1/6/2016 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.15326 USD dtd.6/1/2016)
The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
The amended Technology Upgradation Fund Scheme (ATUFS) has not gone down well with small handloom and textile manufacturers. They said ATUFS will be beneficial for big corporate houses but has nothing much to offer to the small-scale sector. “ATUFS has been recently approved in place of existing Revised Restructured Technology Upgradation Fund Scheme (RR-TUFS) for technology upgrade. “It seems the government is only giving a boost to the corporate sector and not working for the development of small sector. The subsidy for the handloom sector has been decreased to 15% which earlier was 30%. TUFS has played a pivotal role in the uplift of local industry, but now it seems only big houses will benefit from the scheme,” said Vinay Kansal, a small manufacturer. Vinod Thapar, chairman, Knitwear Club, said: “Now subsidy will also be given on the purchase of machinery worth Rs30 crore, while earlier, it was given on the purchase of machinery worth Rs1.5 crore.” “Increasing the ceiling on purchase of machinery directly shows that the government wants to benefit big industrial houses. TUFS was introduced to benefit small manufacturers but now even big manufacturers will be able to benefit from the scheme,” said Sudesh Kalra, another small-scale manufacturer. The Technology Upgradation Fund Scheme was introduced by the government in 1999 to facilitate new and appropriate technology for making the textile industry globally competitive and to reduce the capital cost for the textile industry.
SOURCE: The Tribune India
Government today approved an Memorandum of Understanding (MoU) between India and Bangladesh to set up border haats. The Border Haats will promote the well-being of the people dwelling in remote areas across the borders of the two countries, by establishing traditional system of marketing the local produce through local markets in local currency or barter basis. The "ex-post-facto approval" for the MoU was given by the Cabinet chaired by Prime Minister Narendra Modi. The approval was given for "MoU and Mode of Operation of Border Haats signed on 23.10.2010 with Bangladesh for setting up Border Haats on India-Bangladesh Border.”To establish new border haats after identification of suitable locations in consultation with government of Bangladesh and concerned state governments," an official statement said. The approval was given for "MoU and Mode of Operation of Border Haats signed on 23.10.2010 with Bangladesh for setting up Border Haats on India-Bangladesh Border.”To establish new border haats after identification of suitable locations in consultation with government of Bangladesh and concerned state governments," an official statement said. The approval was also given to modify/revise the terms and condition of the above MoU/addendum in consultation with relevant state governments/central government agencies and Government of Bangladesh. "Though not significant as a percentage of bilateral trade, these measures help to improve economic well-being of marginalised sections of society," it said.
During a visit of Bangladeshi Prime Minister Sheikh Hasina to India in January 2010, it was agreed that border haats shall be established on a pilot basis at selected areas, including on the Meghalaya border, to allow trade in specified products and in accordance with the regulations agreed and notified by both the governments. In order to implement the same, an MoU and the Mode of operation of Border Haats across the border between Bangladesh and lndia was signed on 23rd October 2010. Subsequently, an addendum to Mode of operation of border haats across the border between Bangladesh and India was also signed on May 15, 2012. Four border haats including - Kalaichar (Meghalaya- Bangladesh border); Balat (Meghalaya-Bangladesh border); Kamlasagar (Tripura-Bangladesh border) and Srinagar (Tripura- Bangladesh border) are already operational. In addition, both the government agreed to further establish two border haats in Tripura and four in Meghalaya on the Bangladesh border.
SOURCE: The Economic Times
The Commerce and Industry Minister, representatives of states and the industry is scheduled to meet on January 8 here to discuss ways to promote India's exports, which are in the negative zone since December 2014. The meeting is scheduled as part of the first meeting of the Council for Trade Development and Promotion, chaired by Commerce and Industry Minister Nirmala Sitharaman. The council was formed last year with an aim to involve states in boosting the trade. The Centre and state governments would deliberate on the relevant infrastructure to promote trade and identify impediments that are affecting exports, an official said. FIEO, which will participate in the meet, said that it will raise issues related to tax refund in states. "Large amount of refund is pending with states. Filing of tax is online but refund is not online. These things impact exports," Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said. He said other issues, which would come up include demand for inclusion of certain taxes like entry tax and electricity tax in the GST. "We also want states to do handholding to small players in getting Geographical Indications and patents so that they get more realisation," he added.
India's exports continued to be in negative zone for the 12th straight month in November. It declined by 24.4 per cent to $20.01 billion in November on account of global demand slowdown and falling oil prices. During April-November this fiscal, the exports contracted by 18.46 per cent year-on-year to $174.3 billion. The council provides a platform to state governments and UTs for articulating their perspective on trade policy to help them develop and pursue export strategies in line with national foreign trade policy. Besides, it would help the Centre apprise states and UTs about international developments affecting India's trade potential and opportunities and prepare them to deal with evolving situation. The other members of the council include Chairman Railway Board, Niti Aayog Secretary and CEO, Director General of Foreign Trade, Director General of FIEO, representatives of CII and FICCI and concerned Joint Secretary of Department of Commerce.
SOURCE: The Economic Times
India's largest textile park will come up in Telangana's Warangal town, Chief Minister K. Chandrasekhar Rao announced on Wednesday. He said the proposed 'cotton-to-garment' park will be set up in an area of 2,000-3,000 acres. The Warangal district collector has already released Rs.100 crore for acquiring land for the textile cluster. The chief minister said that while textile parks in different parts of the country like Solapur, Tirupur and Surat were engaged in manufacturing specific categories of garments, the proposed park in Warangal will cover all segments. KCR, as the chief minister is known, said the international standard park will also have an apparel park for readymade clothing. He said the government would promote the park in collaboration with various companies. "Some companies have already come forward." He was confident that with a major railway junction in Warangal and the possibility to build an airport, the textile cluster would have tremendous potential. He believes the park with a township will increase Warangal's population by four to five lakh in three to four years.
With a population of 10 lakh, Warangal is the second biggest city in Telangana after Hyderabad. KCR announced that Warangal will also be developed as an education hub. He said the foundation stone for a health university would be laid soon. He also declared that a tribal university, veterinary and agriculture colleges and a sainik school too will come up in the town. He announced the formation of a special development authority for development of Warangal, which has been selected under the Smart Cities project of the central government. Every year, Warangal will be allocated Rs.300 crore in the budget. A total of Rs.3,000 crore is expected to be provided under all schemes.
A multi-speciality hospital, multistoried buildings for the offices of municipal corporation, district collector, police commissioner, development of a theme park and convention centre were the other announcements made by the chief minister. The government will also construct 30,000 houses under double bed-room housing scheme for poor over next two years to make Warangal a slum-free city.
SOURCE: The Economic Times
Discount sale on winterwear has started in the middle of the season, as an unusually warm winter has hurt demand, forcing top brands to tweak their strategies. Industry experts estimate India's annual winter wear market at around $2.3 billion (Rs 15,300 crore). This year, sales are around 15% below the expected level because of a mild winter in the North, said two of them. Brands such as Woodland and Marks & Spencer, which are high on winter wear, started selling winter wear in October, a month earlier than usual, expecting people to buy in anticipation of a harsh winter. While several of them are now replacing heavy woolens with light ones, brands such as Levi Strauss and Woodland started offering discounts on winter apparel, footwear and accessories as early as December 23. "Due to the balmy winters this year, we at Woodland have tweaked our inventory at the stores accordingly. Since we see slow demand for bulky winter merchandise, we have stocked our stores with sweatshirts, fleeces, bomber and gilet jackets instead, which have been flying off the shelves. We also have a range of ankle boots, which have been the rage all winter and have replaced thigh high boots this season," said Managing Director Harkirat Singh.
Marks & Spencer is focussing on light knits, cable knits and cashmere jumpers this season. "This winter, layering was a key trend. As every part of India does not face winter with same intensity, having a range of styles in linen refreshed in latest colours of the season really helps, so we continue to offer linen all year round," said Venu Nair, managing director of Marks & Spencer Reliance India. He refused to comment on current trading and trading over the last quarter citing the silent period before reporting its group results on January 7. Pepe India, which is primarily a denim brand but also sells winter apparel extensively, launched its winter collection ahead of Diwali. "Normally we used to launch winter collection after Diwali, but this year we went ahead with it by October 15. We also reengineered our product line and brought more of sweat shirts and lighter denim jackets which are useful for a longer part of the season," said CEO Kavindra Mishra. Most parts of northern India, which is a huge market for winter wear for apparel brands, has experienced warmer winter this year. According to the India Meteorological Department, minimum temperature as on Tuesday was 5-7 degrees above normal in places such as Delhi, Chandigarh, Punjab, Haryana and Himachal Pradesh. "Winter wear is an extremely seasonal product and it is limited to a small part of the geography of India," said Devangshu Dutta, CEO at consultancy Third Eyesight. "From that point of view, the sales of winter wear would have got impacted." However, he said, it is too early until late January to term the season a write-off. "We have seen that the weather patterns are fairly unpredictable; so you can actually get a cold snap in the middle of January and that time it pushes up sales."
SOURCE: The Economic Times
The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 31.33 per barrel (bbl) on 06.01.2016. This was lower than the price of US$ 32.51 per bbl on previous publishing day of 05.01.2016.
In rupee terms, the price of Indian Basket decreased to Rs 2090.22 per bbl on 06.01.2016 as compared to Rs 2163.09 per bbl on 05.01.2016. Rupee closed weaker at Rs 66.72 per US$ on 06.01.2016 as against Rs 66.54 per US$ on 05.01.2016. The table below gives details in this regard:
|
Particulars |
Unit |
Price on January 06, 2016(Previous trading day i.e. 05.01.2016) |
Pricing Fortnight for 01.01.2016 (Dec 12 to Dec 29, 2015) |
|
Crude Oil (Indian Basket) |
($/bbl) |
31.33 (32.51) |
33.58 |
|
(Rs/bbl |
2090.22 (2163.09) |
2234.08 |
|
|
Exchange Rate |
(Rs/$) |
66.72 (66.54) |
66.53 |
SOURCE: PIB
India’s rupee dropped to a three-week low as demand for riskier assets ebbed after China weakened the yuan’s fixing to the lowest since 2011 and North Korea said it tested a hydrogen bomb. The rupee declined 0.4 percent to 66.83 a dollar in Mumbai, prices from local banks compiled by Bloomberg show. It fell to 66.8350 earlier, the weakest level since Dec. 16. A gauge of dollar strength advanced for an eighth day, set for its longest run of gains since September 2014. The yuan sank to a five-year low as the People’s Bank of China lowered its reference rate for a seventh day, spurring speculation policy makers are becoming more tolerant of depreciation as intervention costs rise and economic growth slows. While allowing weakness may help the Chinese economy, it risks spooking global markets, according to Japan’s Resona Bank Ltd. “The yuan is pulling all other Asian currencies lower,” said Paresh Nayar, Mumbai-based head of currency and money markets at the local unit of South African lender FirstRand Ltd. “A deepening slowdown in China will have an impact on other countries as well,” he said, adding that the dollar’s strength is also weighing on the rupee. Investor sentiment also soured as North Korea conducted its fourth underground nuclear test Wednesday, risking reigniting tensions with China and the U.S. after months of calm even as some experts cast doubt on the full extent of Pyongyang’s claim.
Bond Yields
The yield on Indian sovereign bonds due May 2025 was little changed at 7.74 percent, prices from the central bank’s trading system show. India missed its target at an auction of treasury bills for the first time since May, leading to speculation some investors demanded higher yields amid the selloff in emerging markets. The PBOC had shocked global markets with its yuan devaluation in August, saying at the time that it was revamping the fixing system to give market forces greater sway. Authorities in the world’s second-largest economy revived intervention in the stock market this week, seeking to stem a rout. “Broadly, it does mean weaker Asia currencies if the yuan is weakening but it’s going to be to varying degrees,” said Mitul Kotecha, Singapore-based head of Asia currency and rates strategy at Barclays Plc. “Currencies like the Korean won, Taiwan dollar and Singapore dollar will be more sensitive to yuan gyrations.”
SOURCE: The Bloomberg
The World Bank expects India's growth to pick up to 7.8% in the next financial year, projecting it to be the fastest growing economy in the world for the next three years by a distance, riding on stronger domestic policy reforms. India is expected to notch near 8% growth in the subsequent years as the world economy also picks up pace to 2.9% growth in 2016 compared with a modest 2.4% in the just concluded year. "South Asia will be a bright spot, reflecting improved conditions in India," the World Bank said in its flagship 'Global Economic Prospects' released on Wednesday. The report pegs growth in the current year at 7.3%, same as last year while raising concerns over legislative reforms. "In India, progress in reforms is not assured as the upper house of Parliament, which the ruling party does not control, has the power to block the government's legislative agenda," the report said, adding that the government has made progress in key areas such as energy and in November announced major reforms to liberalize foreign direct investment (FDI) in several sectors.
According to the report, weak growth among major emerging markets will weigh on global growth in 2016, but economic activity should still pick up modestly to a 2.9% pace, from 2.4% in 2015, as advanced economies gain speed. Recognizing that the simultaneous weakness in most major emerging markets is a concern for achieving the goals of poverty reduction and shared prosperity, the report warned that the spillovers from major emerging markets will constrain growth in developing countries and pose a threat to hard-won gains in raising people out of poverty. "More than 40% of the world's poor live in the developing countries where growth slowed in 2015," said World Bank Group president Jim Yong Kim. "Developing countries should focus on building resilience to a weaker economic environment and shielding the most vulnerable. The benefits from reforms to governance and business conditions are potentially large and could help offset the effects of slow growth in larger economies.” According to the report, developing economies are forecast to expand by 4.8% in 2016, less than expected earlier but up from a post-crisis low of 4.3% in the year just ended. "Growth is projected to slow further in China, while Russia and Brazil are expected to remain in recession in 2016. The recently negotiated Trans-Pacific Partnership could provide a welcome boost to trade," it said. "There is greater divergence in performance among emerging economies. Compared to six months ago, risks have increased, particularly those associated with the possibility of a disorderly slowdown in a major emerging economy," said World Bank Group vice-president and chief economist Kaushik Basu. "A combination of fiscal and central bank policies can be helpful in mitigating these risks and supporting growth."
SOURCE: The Economic Times
Prime minister of Pakistan Nawaz Sharif and Sri Lankan Prime Minister Ranil Wickremesinghe announced the opening of 'Pakistan Single Country Exhibition 2016' on Tueday. The exhibition will be held to explore business potential between the two countries Pakistan and Sri Lanka. The Trade Development Authority of Pakistan (TDAP) are arranging the largest Single Country Exhibition at Sri Lanka which is organized under the patronage and support of Government of Sri Lanka. More than 110 companies from Pakistan are participating in the event. Renowned companies from Textile, Garment & Accessories, Handicrafts, Agro, Engineering, Marble & Granite, Jewelry sector will participate in the event. Large number of visitors are expected at the exhibition. A major trade delegation from Maldives is also expected to visit the Pakistan exhibition in Sri Lanka. The exhibition will be a true showcase of the progressive Pakistan with collective presence of top Pakistani brands in the event, the TDAP said. Major components of Single Country Exhibition will be exhibition display, Business to business meetings and Pakistani Food Festival. The exhibition will be held at the BMICH in Colombo from 15th to 17th January 2016.
SOURCE: Yarns&Fibers
The Free Trade Agreement between Pakistan and Sri Lanka came up for discussion on Tuesday during the visit of Pakistani Prime Minister Nawaz Sharif to the island nation. During his meeting with sri Lankan President Maithripala Sirisena, the two sides discussed the issues related to the implementation of the FTA and agreed to include Services and Investments chapters in the bilateral trade agreement. "This would enable our companies to form joint ventures for export to third countries," Sri Lankan and Pakistani newspapers quoted Sharif as saying. Sharif, who is on a three-day visit, noted that Sri Lanka enjoys exceptional position of being the first country with which Pakistan entered into a Free Trade Agreement (FTA). "The present volume of trade (approx. $325 million) does not reflect true potential. We have agreed to re-invigorate our efforts to realize the goal of achieving $1 billion bilateral trade target at the earliest. I re-iterated Pakistan's offer to setup Cement and Sugar Plants in Sri Lanka, on mutually agreed terms, for the long term benefit of Sri Lankan economy. We have also conveyed our readiness to welcome Sri Lankan investment in Pakistan. We have also expressed satisfaction on the work of Pakistan-Sri Lanka Joint Economic Commission in promoting bilateral trade," he said. Pakistan and Sri Lanka also signed eight agreements and memoranda of understanding (MoU). The agreements for cooperation in fields of health, education, trade, technology, tourism, gems and jewelry were signed during delegation-level talks between the two countries.
Among the MoUs signed was one between Pakistan Sri Lanka Business Council of the Federation of Chambers of Commerce and Industry of Pakistan and Sri Lanka Pakistan Business Council of the Ceylon Chamber of Commerce. Nawaz Sharif and his Sri Lankan counterpart Ranil Wickremesinghe launched the 'Pakistan Single Country Exhibition 2016' aimed at tapping the business potential of two countries. Addressing a gathering of Pakistani and Sri Lankan businessmen, Sharif invited the Sri Lankan businessmen to invest in different sectors in Pakistan. Sharif said the `Pakistan Single Country Exhibition' would provide a useful platform to further enhance the excellent commercial and bilateral relations between Pakistan and Sri Lanka. He termed it a timely opportunity for Sri Lankan businessmen to benefit from what he called the vibrant and progressive economy of Pakistan. Wickremesinghe said that while Pakistan and Sri Lankan enjoyed strong political relationship, the economic relationship needed to be strengthened.
SOURCE: Fibre2fashion
The World Bank on Wednesday cut its global economic growth forecast for 2016, saying the weak performance of major emerging market economies will tamp activity overall, as will anemic showings from developed countries such as the United States. Global growth should accelerate to 2.9 per cent this year from 2.4 per cent in 2015, the bank said, but that still represents a downgrade from its June forecast for 3.3 percent growth. The bank raised particular concern about the flagging performance of top emerging economies. “Given the size and global economic integration of the largest emerging markets – Brazil, the Russian Federation, India, China, and South Africa, or the so-called BRICS – the simultaneous slowdown underway in all but one of them could have significant spillovers to the rest of the world,” the report said. The bank forecast the Russian and Brazilian economies would continue to contract in 2016 rather than return to growth as it had estimated in its previous outlook in June.
Real gross domestic product in Russia could shrink at a 0.7 per cent annual pace this year, it said. In June it had forecast 0.7 per cent GDP growth for 2016. The bank estimates the Russian economy shrank by 3.8 per cent in 2015. In Brazil, GDP is forecast to decline by 2.5 per cent in 2016 compared with an earlier estimate for growth of 1.1 per cent, the World Bank said. The Brazilian economy likely contracted at a 3.7 per cent rate in 2015. China GDP growth was estimated to slow to 6.7 per cent in 2016 from an estimated 6.9 per cent in 2015. In June the bank had estimated 2016 growth of 7.0 per cent. The South African economy should grow at a modestly faster rate in 2016 than last year – 1.4 per cent compared with 1.3 per cent – but substantially slower than the 2.1 per cent growth forecast in June. Of that group, India was the only one expected to see notable improvement in economic performance from 2015 – advancing at a 7.8 per cent rate in 2016 versus 7.3 per cent in 2015. But even there, the bank nipped its 2016 estimate by 0.1 percentage point from its earlier forecast. The bank also trimmed its outlook for the United States and other developed economies. The US economy should grow by 2.7 per cent, down from an earlier estimate of 2.8 per cent but up from 2015’s 2.5 per cent. Estimates for growth in the euro zone were trimmed by the same amount, to 1.7 per cent from 1.8 per cent previously, although that would mark a modest acceleration from 2015’s estimated 1.5 per cent rate.
SOURCE: The Financial Express
Crude oil prices plunged 6 percent on Wednesday, diving below $35 per barrel for the first time since 2004 as data showing a shockingly large build-up of U.S. gasoline supplies fed fears that a global surplus was still growing. The sell-off, the biggest one-day drop for global benchmark Brent futures since the start of September, takes losses this year to more than 8 percent, a descent stoked by worsening Chinese economic data, the world's No. 2 oil consumer, and a fierce row between Saudi Arabia and Iran that some say may be more bearish than bullish. The focus on Wednesday was U.S. government data showing a 10.6 million-barrel surge in gasoline supplies, the biggest build since 1993, which some traders said signaled a slow-down in demand that could prolong the global glut. The figures overshadowed a 5.1 million-barrel fall in crude stocks. [EIA/S] "Gasoline was the sole source of strength within the complex, and that looks to have ended," said John Kilduff, a partner at energy hedge fund Again Capital.
Brent futures LCOc1 fell $2.19 to settle at $34.23 a barrel. Earlier, it fell to as low as $34.13, its lowest level since the start of July 2004. U.S. crude futures CLc1 fell $2.00 to settle at $33.97 a barrel, its lowest close since February 2009. Traders shrugged off rising geopolitical risks, including an apparent North Korea nuclear test. Many reckoned that the row between Saudi Arabia and Iran posed little threat to oil shipments, but made an agreement on output even less likely. "I think we'll see a price war soon to keep market share," said Tariq Zahir, an analyst at Tyche Capital Advisors. "Prices will get lower and I think we'll hit $32 again."
Following an 18-month rout, the fierce selling this year has caught some by surprise, and prompted others to pick up bearish options at lower prices. The $30 February WTI put CL300N6 was the second most traded strike price at 12,700 lots after $30 March puts CL300O6 at 21,500 lots. The CBOE volatility index .OVX, a gauge of options premiums based on moves in the U.S. oil exchange traded fund, was up 5.5 percent after moving sideways on Tuesday. "We've entered some unchartered territories, so it's no surprise that traders are pumping volatility," said John Saucer, vice president of research and analysis at Mobius Risk Group. Feeding into the weak market sentiment, a survey showed that China's services sector expanded at its slowest pace in 17 months in December, following on from weak factory data on Monday.
SOURCE: The Reuters
The U.S. trade deficit narrowed in November likely as efforts by businesses to reduce an inventory overhang pushed imports of goods to their lowest level in nearly five years, outpacing a drop in exports. The Commerce Department said on Wednesday the trade gap fell 5.0 percent to $42.4 billion. October's trade deficit was revised up to $44.6 billion from the previously reported $43.9 billion. Despite the shrinking trade deficit, declining exports are the latest indication that economic growth braked sharply in the fourth quarter. While inventories likely accounted for much of the drop in imports, the weakness could also be pointing to a slowdown in domestic demand, which was flagged by weak December automobile sales. Economists polled by Reuters had forecast the trade gap widening to $44.0 billion in November. When adjusted for inflation, the deficit fell to $59.60 billion from $61.03 billion in October. Trade, which subtracted 0.26 percentage point from gross domestic product in the third quarter, is likely to have remained a drag on growth in the fourth quarter. A strong dollar and the inventory bloat, which has left businesses with little appetite to order more merchandise, have combined with spending cuts in the energy sector to take some steam out of the economy in recent months.
Economists this week slashed their fourth-quarter GDP growth estimates by as much as one percentage point to as low as a 0.5 percent annual pace, which also accounted for unseasonably warm weather that has impacted on sales of winter apparel and other merchandise. The economy grew at a 2 percent annual rate in the third quarter. Businesses accumulated a record pile of inventory in the first half of 2015, which was unmatched by demand, leaving warehouses bulging with unsold goods. Imports of goods dropped 2.0 percent to $183.5 billion in November, the lowest level since February 2011. Imports of industrial supplies and materials were the weakest since May 2009. There were also declines in imports of capital and consumer goods. Auto imports, however, rose.
Lower oil prices as well as increased domestic energy production also helped to curb the import bill. The price of petroleum averaged $39.24 per barrel in November. That was the lowest level since February 2009 and down from $40.12 in October and $82.92 in November 2014. The dollar gained almost 10 percent against the currencies of the United States' main trading partners last year, eroding the appeal of U.S.-made goods overseas. Lackluster global demand also has put a damper on exports. Goods exports slipped 1.1 percent to $122.2 billion in November, the lowest since June 2011. Exports of industrial supplies and materials hit their lowest level in five years, while petroleum exports were the weakest since December 2010. Exports of non-petroleum products dropped to their lowest level since June 2011. The decline in exports to the United States' main trading partners was nearly broad-based in November. But the politically sensitive U.S.-China trade deficit fell 5.2 percent to $31.3 billion in November.
SOURCE: The CNBC
