INTERNATIONAL
Institute for Plasma Research (IPR) signed an MoU with Man Made Textile Research Association (MANTRA) on Tuesday for introducing in-line plasma treatment facility in the existing textile manufacturing process to improve that quality of textile processes in the country’s largest textile hubs - Surat. MANTRA is a research organisation for fulfilling quality control needs of a growing textile industry in Surat and in South Gujarat. IPR director D Bora said that the plasma improves the fibre quality, drastically reduces shrinking of fabric and is a clean technology with no chemicals involved. Plasma will surely provide a major boost for quality improvement in textile manufacturing. He also suggested MANTRA members to look into plasma nitriding-a process to improve hardness of machine tools and parts of textile units by treating them with plasma. In case of wool, plasma treatment nearly eliminates the prickly feel and entanglements of the fibre. The IPR, through it's Facilitation Centre for Industrial Plasma Technologies (FCIPT) in Gandhinagar, will develop a plant that can treat synthetic textiles with plasma at the rate of 30 to 40 metres per minute. The facility will be developed by October 2017, or even earlier, claim IPR officials. Director MANTRA VI Bachkaniwala said that the IPR's Plasma treatment facility will be 6 to 10 times cheaper than what is available in Europe or US and improve their fibre strength and colour enhancements of textiles.
SOURCE: Yarns&Fibers
Telangana Spinning and Textile Mills Association has urged Chief Minister K. Chandrashekhar Rao to support the spinning mills in the State in tiding over the present crisis fomented by recession in the global market. Calling on the Chief Minister on Wednesday, representatives of the association apprised him of the problems faced by the millers. In response, Mr. Rao assured them of support and expressed regret at the increase of duties on cotton exports. Measures should be taken to increase cotton products in the indigenous markets, in view of the possible reduction in exports, he noted. The millers attributed the impact on export to the decision by China to diminish the exchange value for its currency. Member of Legislative Assembly Marri Janardhan Reddy and Secretary of Industries Arvind Kumar participated.
SOURCE: The Hindu
Falling exports is an area of concern despite a healthy current account situation, as it impacts economic performance, industrial growth and employment opportunities, President Pranab Mukherjee said in his keynote address at exporters’ body Fieo’s golden jubilee celebrations on Wednesday. With global trade expected to remain sluggish in 2016-17 as well, the President said that all efforts need to be made to retain the country’s share in the world market, and then make it grow. “Indian policy makers and industry need to be innovative to capture global markets, with customised products and aggressive marketing backed by quality control and high standards,” Mukherjee said at the event. He pointed out that India’s exports of goods have been continuously declining since December 2014, although services exports fared slightly better. While the export sector remained bleak, some comfort was brought about by falling global commodity prices, which led to a dwindling import bill and a healthy current account deficit of 1.4 per cent of the GDP in first three quarters of 2015-16, Mukherjee said.
Commerce and Industry Minister Nirmala Sitharaman, who also spoke on the occasion, said the fall in export growth was tapering and better export performance was expected in the coming months. The Minister said Indian exporters needed to work on improving the standards of their products, and integrate with the global value chain for better performance. “There is a need for bringing in improved standards from within the industry. Today’s world is hinging more on standards, and the industry should itself contemplate on it,” she said. There has to be recognition of the fact that world trade is now not just in finished products but in bits and pieces, with everybody being linked to the value chain, she added. India’s exports have fallen for two consecutive years with a decline of 15.85 per cent in 2015-16 to $261.13 billion. In 2014-15, exports were to the tune of $310 billion, which were again lower than exports worth $314 billion the year before.
SOURCE: The Hindu Business Line
Expressing hope that the worst phase for Indian exports is over, the government today said overseas shipments may now enter the positive territory. Commerce and Industry Minister Nirmala Sitharaman said that the declining trend in exports was tapering off in recent months. “We hope that the worst phase for Indian exports is over and we will move on to the positive (zone) from here onwards,” she said at a function of the Federation of Indian Export Organisations (FIEO) here. Declining for 16th straight month in March, exports contracted by 5.47 per cent to USD 22.71 billion in the month as shipments of petroleum and engineering products shrunk sharply due to tepid global demand. For whole 2015-16 financial year ended March 31, exports declined by 15.8 per cent to five-year low of USD 261.13 billion. The exports, which declined 24.4 per cent in November 2015, however contracted by 5.47 per cent in March. The minister also said that there is an important need to focus on standards of the products and services exported by traders. She said that now a days during any bilateral talk on trade related issues, negotiations focus on standards of products and processes. “Negotiations are now more hinging on standards.” Sitharaman said that the global dip in trade would impact India’s exports also. “Government is not sitting. It is doing lot of things (to promote exports). We are continuously trying to interact with the industry so that we can do something,” she added. She said that two main challenges are – meeting the international standards and linking with the global value chain. Speaking at the occasion, Commerce Secretary Rita Teaotia said, “Our agenda now is to support services exports”. She too asked the industry to focus on standards to enhance competitiveness in the world markets.
SOURCE: The Financial Express
Surat textile market has over 60,000 shops where over 50,000 traders and brokers conduct business. Fraudsters among businessmen have been able to escape without getting caught because there is no centralized data management system with details of a businessman. To prevent and detect financial fraud, police are developing a mobile application which will help collect details about each trader and broker in the textile market. With the android mobile application 'Tex-Suraksha' it will not be easy for fraudsters to escape now after carrying out a fraud under a planned insolvency racket from the textile market of the city. The app will also provide information to a user about a textile businessman. The fraudsters make purchases in crores from raw material suppliers and job workers. They initially make payments on time to win trust. Credit window of three to four months is common in textile market and the fraudsters collect maximum good during this period. They disappear after closing the rented shop and selling the material without making payment to creditors. The Federation of Surat Textile Traders Association (FOSTTA) on Tuesday called a meeting of textile traders in which police shared with them the information about the application's purpose and use. B K Vanar, police inspector, Salabatpura police station said that initially police will collect data of each market developer, shop owner, tenant and broker and upload it into the application. A user can also access the data on the App with password to check details about a businessman. It will prove helpful to a businessman to carry out a safe business. The city police commissioner Ashish Bhatia said that the police now through this application will collect data of businessmen operating from over 60,000 shops. Their photos, native addresses and other details will be stored in the application. This data will help police in detecting crime and to nab the fraudsters.
SOURCE: Yarns&Fibers
India and Pakistan on Tuesday agreed to create a level-playing field for businessmen and investors on both sides of the border even as the Joint Business Forum of the two countries held its sixth meeting in the Capital. “Pakistan is committed to normalising relations with India in line with Prime Minister Nawaz Sharif’s vision of a peaceful neighbourhood. We need to create a level-playing field that helps create interdependencies. This is also necessary in the context of promoting regional connectivity and integration,” Pakistan High Commissioner to India Abdul Basit said while addressing the forum. He also said the recommendations made by the forum on some of the joint working groups would be useful when both sides resume the Comprehensive Bilateral Dialogue. This was the sixth meeting of the India-Pakistan Joint Business Forum. It is co-chaired by Sunil Kant Munjal, Joint Managing Director, Hero MotoCorp Ltd and Chairman, Hero Corporate Services Ltd, and Syed Yawar Ali, Chairman, Nestle Pakistan. However, there was no indication from the Pakistan side as to when it intends to grant the most favoured nation (MFN) trade status to India, the deadline for which was December 2012, sources told BusinessLine . According to sources, the Pakistani delegation mainly consisted of small and medium enterprises and the agriculture sector represented by farmers associations.
10 sectors
The joint business council has identified 10 areas of cooperation: agriculture; automotive and engineering; chemical and petrochemicals; infrastructure; pharmaceuticals; information technology; textiles; education and vocational training; healthcare, and dispute resolution and trade facilitation. The thrust areas of this meeting will be non-discriminatory markets access, relaxing the business visa regime and easing of non-tariff barriers. The forum was set up in June 2013 with private sector representatives from both sides. It had last met in August 2014.
SOURCE: The Hindu Business Line
Financial inequality is highest in India and China among Asia Pacific countries despite the two being among the fastest growing economies, IMF has said. According to the International Monetary Fund, China and India have grown rapidly and reduced poverty sharply, however, this impressive economic performance has been accompanied by increasing levels of inequality. “In the past, rapid growth in Asia came with equitable distribution of the gains. But more recently, while the fast-growing Asian economies have lifted millions out of poverty they have been unable to replicate the ‘growth with equity’ miracle,” the Fund said. As per the report, China managed to increase middle class in urban areas, as did Thailand, while India and Indonesia struggled to lift sizeable portions of their populations toward higher income levels. “In India, differences between rural and urban areas have increased, and have been accompanied by rising intra-urban inequality,” it said.
Many factors have been identified as key drivers of the inequality between rural and urban areas in China and India. In China, rapid industrialisation in particular regions and the concentration of foreign direct investment in coastal areas have led to substantial inequalities between coastal and interior regions. Other factors also include low educational attainment and low returns to education in rural areas. On India, the report said inter provincial inequality is lower in India than in China, and rising inequality in India has been found to be primarily an urban phenomenon. Moreover, the rural-urban income gap has increased, and higher rural inflation has been found to be a key driver of this. Educational attainment has also been identified as an important factor explaining rising inequality in India over the past two decades, the Fund said. The two countries have introduced a number of policies to tackle the rising inequality. China introduced the Minimum Livelihood Guarantee Scheme (Dibao) for social protection in the 1990s. Moreover, various social programs are aiming to expand social safety nets and provide support for the development of rural areas and western regions. In India, the government introduced the Mahatma Gandhi National Rural Employment Guarantee Act to support rural livelihoods by providing at least 100 days of employment. Programs to improve education include the National Education Scheme and Midday Meal Scheme. The Fund lauded the JAM (Jan Dhan-Aadhaar-Mobile) initiative and said that “the JAM trinity initiative helped India in making substantial advances in financial inclusion. More recently, programs aiming for universal bank account coverage were launched”.
SOURCE: The Financial Express
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$ 42.26 per barrel (bbl) on 04.05.2016. This was lower than the price of US$ 43.05 per bbl on previous publishing day of 03.05.2016.
In rupee terms, the price of Indian Basket decreased to Rs. 2811.68 per bbl on 04.05.2016 as compared to Rs. 2852.72 per bbl on 03.05.2016. Rupee closed weaker at Rs 66.54 per US$ on 04.05.2016 as against Rs 66.27 per US$ on 03.05.2016. The table below gives details in this regard:
|
Particulars |
Unit |
Price on May 04, 2016 (Previous trading day i.e. 03.05.2016) |
Pricing Fortnight for 01.05.2016 (13 Apr to 27 Apr, 2016) |
|
Crude Oil (Indian Basket) |
($/bbl) |
42.26 (43.05) |
41.08 |
|
(Rs/bbl |
2811.68 (2852.72) |
2732.23 |
|
|
Exchange Rate |
(Rs/$) |
66.54 (66.27) |
66.51 |
SOURCE: PIB
Garment and footwear exports from the Southeast Asian nation of Cambodia increased by 13 per cent year-on-year to $1.55 billion during the first quarter of 2016, as per a report from the ministry of industry. Last year, exports of garment and footwear sector, the main foreign exchange earner for Cambodia, fetched $7.1 billion, growing at 14.5 per cent compared to 2014 when apparel and footwear export value stood at $6.2 billion. Cambodia ships its clothing and footwear products mainly to Western markets, especially the US, Canada and European countries. In recent years, wages in Cambodian garment factories have increased and the minimum wage for workers currently stands at $140 per month. There are over 1,000 apparel and footwear factories in Cambodia that together employ more than 750,000 people.
SOURCE: Fibre2fashion
Three years after talks for the 16-nation Regional Comprehensive Economic Partnership (RCEP) began, even the first stage of negotiations hasn’t been completed, with some members yet to make offers for liberalisation in goods trade, according to sources. This cast fresh uncertainties over a successful conclusion of the RCEP negotiations at the earliest, even as pressure mounts on the bloc to clinch a deal following the Trans-Pacific Partnership between the US and 11 others. Already, the 2015 deadline for the RCEP deal has lapsed and, going by the progress until the 12th round of talks held in Australia last week, the fresh deadline of 2016 is likely to be missed, too, a source told FE. Members, however, are learnt to have submitted initial offers on two other pillars of the negotiations—services and investment—although differences over several issues persist. Some of the Asean nations are yet to submit offers on goods, a source said. A senior commerce ministry official, however, declined to comment on the issue, citing confidential nature of such talks, though he termed the last round of negotiations “productive”. India, which has already submitted its initial offers on all pillars of negotiations, is concerned about the slow pace of negotiations, also because of the fact that attempts have often been made to project India as the country with an “obstructionist” attitude at the negotiating tables even when facts are to the contrary. Before the last round of talks in Australia, commerce and industry minister Nirmala Sitharaman had expressed hopes for an early conclusion of the RCEP talks, saying India was “keen on having this regional arrangements”.
Lack of consensus over ISDS
Sources said though initial offers have been made in investments, there is a lack of consensus on whether the RCEP will have an ISDS (investor-state dispute settlement) mechanism. While some members believe such a mechanism should exist, some others oppose it.
Services grid mooted
In the latest round of talks, members have agreed to create a common grid where all offers on services will be properly evaluated, the sources said. The RCEP negotiations formally began in May 2013 and members had expressed hopes for a conclusion by September this year. India is learnt to have offered to abolish 80% of tariff lines for 10 Asean members for goods imports, 65% of tariff lines for Japan and South Korea and 42.5% for China. RCEP consists of 10 Asean members and their six free trade agreement partners, India, China, Japan, Korea, Australia and New Zealand. According to an initial assessment made in 2013, RCEP nations included more than three billion people, have a combined GDP of about $17 trillion, and makes up for roughly 40% of the global trade.
SOURCE: The Financial Express
Indonesia and Saudi Arabia have agreed to double their bilateral trade value by 2020 as the two countries believe they have a lot of potential for expansion. Trade Ministry expert for trade services Arlinda Imbang Jaya said the total trade between Indonesia and Saudi Arabia amounted to US$8.5 billion in 2015. Indonesian exports to Saudi Arabia amounted to $3.35 billion in 2015, while imports were worth $5.14 billion. “The figures are yet to reflect the potential of both countries,” she said while receiving a Saudi business delegation at her office in Jakarta on Wednesday. Arlinda said Saudi Arabia had expressed its interest in cooperating with various business players including those running professional nursing care, producing pharmaceutical products, cosmetics and medical equipment. Saudi Arabia is one of the biggest potential markets for Indonesia in the Middle East, she said.
Indonesia’s main export commodities to Saudi Arabia are cars, palm oil, tuna, rubber and rubber products, plywood, paper and paper products, pulp, charcoal, textile and textile products. Arlinda asked Indonesian businesses to increase the quality of their products to meet the requirements set by the Saudi authority, the Saudi Standards, Quality, and Metrology Organization ( SASO ). Head of the Chamber of Commerce and Industry in Mecca Maher Jamal said the trade partnership between Indonesia and Saudi Arabia did not match the political and cultural ties. He said Saudi Arabia was ready to facilitate and help Indonesian companies to expand their businesses in Saudi Arabia. Jamal said the trade value between Indonesia and Saudi Arabia was expected to increase by 15 percent every year. To reach this goal, Saudi Arabia will participate in exhibitions staged by Indonesia, he said, adding that Indonesia also should participate in exhibitions held in Saudi Arabia.
SOURCE: The Jakarta Post
After it overtook the export target with five years to spare, Vietnam's garment and textile industry wants to revise a development plan to 2020 with vision for 2030, to match the industry's progress. The current plan was approved in April 2014, and it is expected that Vietnam garment exports will reach between $20 billion and $25 billion by 2020. However, in 2015, the garment sector already earned an export turnover of $27.5 billion. All the garment and textile businesses have actively taken advantage of opportunities through trade agreements such as the Vietnam-Korea Free Trade Agreement (VKFTA), and Vietnam-EU Free Trade Agreement (EVFTA). Vietnam is now poised to leverage the Trans-Pacific Partnership (TPP), the Vietnam News has reported.
But despite the handsome export revenues, Vu Ð?c Giang, Chairman of the Vietnam Textile and Apparel Association (Vitas) said the industry was facing numerous challenges as many of its companies had closed down or halted production. Therefore, the industry wanted the Government to revise the plan as it was inappropriate and regressive. The Government should outline another long-term plan until 2040 to help the industry's progress go in line with the country's economic development. According to Vitas, with the current growth, the sector has set export turnover at between $40 billion and $50 billion by 2020, instead of targets set in the current plan. Vitas estimated that between 1988 and 2012, the sector attracted 1,551 FDI projects. Of this figure, there were 1,193 garment projects and 358 fibre production projects with a total investment of $3.5 billion. Thanks to the FDI influence, such businesses brought $2 billion into Vietnam to the garment sector in 2015. As a result, the total export turnover of the garment sector reached $24 billion in 2014 and $27.5 billion in 2015, and it is expected to reach $31 billion by late 2016. Giang said that apart from the five key export products, Vietam also exported various kinds of fibre with an export turnover of over $3 billion annually and different types of fabric with a turnover of $1 billion per year.
Apart from the rapid production scale and strong export growth, the garment sector has also coped with unresolved shortcomings. These shortcomings needed to be handled soon to make the sector's development sustainable. Vitas also wants the government to initiate policies to attract investments in this sector, including high-quality fibre production and dyeing projects. It has also asked the government to take a relook at industrial parks or key economic zones including those from the garment and textile sector. Vietnam's textile industry has done remarkably well despite the lack of specialised industrial zones to attract investments in textile and dyeing. The sector still relies on importing high-quality fibre for manufacturing export products which cost $15 billion in 2015. Giang also said the government needs to invest in infrastructure development, and create incentives for investors. Special attention should be paid to the production units and the origin of textile fibre and threads, and dyeing, he said.
SOURCE: Fibre2fashion
Even as Sri Lanka prepares for the third round of talks for a Free Trade Agreement (FTA) with China, the future of its garment exports is weighing heavily on Colombo's mind ahead of the Trans Pacific Partnership coming into force. “When reviewing the garment sector, we need to be able to carefully address the Trans-Pacific Partnership Agreement under which tax free garment export opportunities have been given to countries such as Vietnam. This may also affect exports from Sri Lanka in the future,” Industry and Commerce Minister Rishad Bathiudeen said. Bathiudeen was addressing the “Meet the Minister” session organised by the National Chamber of Commerce of Sri Lanka last week. The TPP will enable countries to engage in competitive markets and supply the American and Japanese markets at low rates. “TPP must therefore be reviewed further. In this context, arrangements are under way to hold the third round of negotiations for China-Sri Lanka FTA in June this year,” the Minister said. rade between Sri Lanka and China crossed the $4 billion mark last year for the first time in the bilateral trade history, surging by 17 per cent from 2014. However, 93 per cent of 2015's total trade consisted of imports from China-mainly iron & steel, fabrics and fibers, cotton, and urea fertilizer.
SOURCE: Fibre2fashion
The International Monetary Fund (IMF) expects growth in Asia and the Pacific to remain strong at 5.3 per cent this year and next, accounting for almost two-thirds of global growth. Despite a slight moderation, Asia remains the engine of global growth, according to the IMF's latest Regional Economic Outlook for Asia and the Pacific. While external demand remains sluggish, domestic demand continues to show resilience across most of the region, driven by low unemployment, growth in disposable income, lower commodities prices, and macroeconomic stimulus, the IMF said in a press release. “Of course, Asia is impacted by the still weak global recovery, and by the ongoing and necessary rebalancing in China,” said Changyong Rhee, Director of the Asia and Pacific Department at the IMF. “But domestic demand has remained remarkably resilient throughout most of the region, supported by rising real incomes, especially in commodity importers, and supportive macroeconomic policies in many countries,” he added. The outlook for individual countries within the region varies. China and Japan, the two largest economies in Asia, continue to face challenges. China's growth is forecast to moderate from 6.9 per cent in 2015 to 6.5 per cent this year and 6.2 per cent in 2017. China's economy continues its rebalancing of shifting away from manufacturing and investment to services and consumption. While this transition to slower but more sustainable growth is desirable for both China and the global economy, it is causing changes in the manufacturing sector over the medium term, as heavy industries, such as steel and shipbuilding, face major consolidation to reduce excess capacity. Meanwhile, consumer expenditure has become a more important growth engine.
Japan's growth is expected to continue at 0.5 per cent in 2016, before dropping to -0.1 per cent in 2017 as the effect of the widely anticipated consumption tax increase takes hold (although this forecast does not take into account likely growth-supporting policies to offset the increase). An aging population and high public debt remain major drags on Japan's long-term growth. Other economies in the region are set to perform well. India has benefited from lower oil prices and remains the fastest-growing large economy in the world, with GDP expected to increase by 7.5 per cent this year and next. In Southeast Asia, Vietnam is leading the fast-growing economies in the region, helped by rapidly growing exports of electronics and garment manufactures. For the Philippines and Malaysia, growth is expected to remain robust, underpinned by resilient domestic demand. The IMF also said that the region faces a number of external challenges, including slow growth in advanced economies, a broad slowdown across emerging markets, weak global trade, persistently low commodity prices, and increasingly volatile global financial markets. These risks compound domestic vulnerabilities, such as high debt incurred in recent years. In the short term, China's transition to a new growth model will disrupt its regional partners, especially those heavily exposed to the region's biggest economy.
Geopolitical tensions and domestic policy uncertainty add risks of potential trade disruptions or lower domestic demand. Natural disasters, too, can reverse economic gains, particularly in lower-income countries and small states (including many Pacific islands). Small states also face the challenge of reduced financial services by global banks (or “de-risking”), which could hold back financial inclusion and growth. The report also recognizes, however, that the outcome could turn out more positive than forecast. Low commodity prices could be a bigger boost to the region's economies than expected; and regional and multilateral trade agreements, such as the Trans-Pacific Partnership, could benefit Asia-Pacific even before they are ratified. While Asian economies have strong buffers and are relatively well positioned to face the challenges ahead, countries will need to adopt economic policies that shore up growth and reduce their exposure to global and regional risks.
On the fiscal front, gradual consolidation is generally desirable to rebuild policy space, but countries can adjust the composition of spending to allow for growth-friendly and much-needed infrastructure and social spending in many economies, the report said. Flexible exchange rates should continue to be the first line of defence against external shocks. At the same time, foreign-exchange intervention and capital-flow measures could be deployed in special circumstances, such as disorderly market conditions. The report also notes that region has extensively used macroprudential policies to deal with financial volatility and risks and should continue to do so as a complement to monetary and fiscal policies. The report also emphasizes that structural reforms are needed to help bolster potential growth and facilitate rebalancing. The region's past reforms have been highly effective, fostering economic diversification and facilitating Asia's entry into global markets, it noted.
SOURCE: Fibre2fashion
A closely monitored survey is pointing to waning growth in the 19-country eurozone at the start of the second quarter of the year. Financial information company Markit says Wednesday that its purchasing managers index – a broad gauge of business activity – across the region fell modestly to 53 in April from 53.1 the previous month. Though above the 50 threshold indicating expansion, the reading has fallen from the start of the year. The eurozone is in a ”low gear,” Markit says. Official European Union figures last week showed the eurozone expanded by a quarterly rate of 0.6 percent in the first three months of the year. Markit says its survey points to annual growth of 1.5 percent, lower than the 2.5 percent tick the official figures showed.
SOURCE: The Financial Express
US private employers hired the fewest number of workers in three years in April, which could raise concerns that a recent sharp slowdown in economic growth was spilling over to the labor market. Other data on Wednesday showed a steep decline in the trade deficit in March. While the smaller trade gap could be a potential boost to the weak first-quarter economic growth estimate, the plunge in imports of goods to their lowest level since 2010 hinted at sluggish domestic demand. The ADP National Employment Report showed private payrolls increased 156,000 last month, the smallest gain since April 2013, after rising 194,000 in March. The ADP report, which is jointly developed with Moody’s Analytics, was published ahead of the government’s more comprehensive employment report for April due on Friday. “The job market appears to have stumbled in April. Job growth noticeably slowed, with some weakness across most sectors,” Mark Zandi, chief economist of Moody’s Analytics, said. “One month does not make a trend, but this bears close watching as the financial market turmoil earlier in the year may have done some damage to business hiring.”
According to a Reuters survey of economists, nonfarm payrolls likely increased by 202,000 jobs in April after rising 215,000 in March. The unemployment rate is forecast holding steady at 5.0 percent. The labor market has so far weathered the sluggish economy, which has been slammed by weak exports as a result of a strong dollar and tepid global demand. Growth has also been eroded by relentless aggressive spending cuts in the energy sector in the aftermath of last year’s plunge in oil prices, as well as efforts by businesses to reduce an inventory overhang. The economy slowed to an annual growth pace of 0.5 percent in the first quarter after expanding at a 1.4 percent rate in the fourth quarter. The ADP report showed employment in the goods-producing sector dropped by 11,000 jobs in April, with manufacturing payrolls declining by 13,000 positions. The construction industry added 14,000 jobs last month. Services industry employment increased by 166,000 jobs in April, down from 189,000 in March. The dollar briefly fell against a basket of currencies on the ADP report. Prices for U.S. government debt trimmed losses.
TRADE DEFICIT NARROWS
In a second report, the Commerce Department said on Wednesday the trade deficit fell 13.9 percent to $40.4 billion in March, the smallest since February 2015, also as exports fell. The government reported last month that trade subtracted 0.34 percentage point from first-quarter gross domestic product. The smaller-than-forecast trade gap suggests that the advance GDP growth estimate could be bumped up when the government publishes its revised estimate later this month. The lingering impact of the dollar’s past rally and soft global demand have hampered exports, but there are signs that some of the drag is starting to fade. The Institute for Supply Management reported on Monday that a gauge of export orders received by U.S. manufacturers rose in April for a second straight month, reaching its highest level since November 2014. The dollar has weakened 3.8 percent against the currencies of the United States’ main trading partners so far this year, which should improve the competitiveness of U.S.-made goods on international markets. The greenback gained 20 percent on a trade-weighted basis between June 2014 and December 2015.
In March exports of goods slipped 1.6 percent to $116.8 billion. Overall exports of goods and services fell 0.9 percent to $176.6 billion. Exports of food were the lowest since September 2010. Exports of industrial supplies and materials fell to a six-year low, while consumer goods exports were the lowest since March 2013. Exports to the European Union surged 9.2 percent, while goods shipped to Canada and Mexico jumped 10.9 percent and 6.1 percent, respectively. Exports to China climbed 11.2 percent. Imports of goods tumbled 4.3 percent to $175.3 billion, the smallest since December 2010.
Weak imports potentially signal slackening domestic demand, but could also be related to ongoing efforts by businesses to reduce an inventory glut. Lower oil prices and increased domestic energy production are also helping to keep the import bill in check. In March, imports were held down by industrial supplies and materials imports which hit their lowest level since April 2004. Petroleum imports were the lowest since September 2002, even as oil prices rose to an average $27.68 per barrel. A third report from the Labor Department showed productivity, which measures hourly output per worker, declined at a 1.0 percent annual rate in the first quarter after shrinking at a 1.7 percent pace in the fourth quarter. Weak productivity helps explain the divergence between lackluster economic growth and the fairly robust labor market.
SOURCE: The Financial Express
