Manufacturing in sharp April drop

10 June 2011 Last updated at 12:30 GMT Thousands of people lined the streets on the day of the royal wedding, an extra bank holiday on 29 April UK manufacturing saw its biggest monthly drop for almost two and a half years in April, figures show, as the royal wedding bank holiday and the Japanese tsunami hit production.

Manufacturing output fell by 1.5% between March and April, the Office for National Statistics (ONS) said.

The ONS compared the month with June 2002, the month of the Queen's Golden Jubilee, when manufacturing fell 5.4%.

Economists played down the significance of the data, saying it was distorted.

Manufacturing ouput was up 1.3% on April last year.

'Overstated'

The ONS said April 2011 was an "unusual" month for a number of reasons, namely the special bank holiday created for the royal wedding, the royal wedding itself and the effects of the Japanese tsunami.

It said it had also heard from a number of car manufacturers who said that "the after-effects of the tsunami in Japan reduced production levels in April 2011, due to a lack of parts".

Peter Dixon, economist at Commerzbank, said he would not take the figures at face value.

"There is weakness in the manufacturing sector, that's clear," he said. "But I think this figure overstates it and you wouldn't want to pin too many assumptions on one number.

"My guess is that part of this will be recouped in subsequent months. It's very much reminiscent of what happened in 2002 following the Golden Jubilee celebrations. We had some terrible numbers... but thereafter we got something of a rally."

In June 2002, an extra bank holiday was created for the Golden Jubilee and the May bank holiday was also moved to the start of June.

The wider index of production, which includes sectors such as mining and energy supply, fell 1.7% on the month and 1.2% on the year.

The ONS also said that the warm weather had an impact on the energy sector.

April 2011 was the warmest April on record, and reduced demand led to electricity supply ouput falling 4.3% from March and gas supply output falling 11.2% on the month.

View the original article here

Japan air travel slumps in April

2 June 2011 Last updated at 06:08 GMT The travel industry has been hit by the destruction caused to infrastructure by the quake and tsunami Japan's air travel industry has been hit by the earthquake and tsunami according to the International Air Travel Association (IATA).

Japan's domestic air travel fell 31% in April, compared with the same month a year ago, the latest figures show.

IATA said international traffic to Japan was down by about 20%.

Widespread destruction and fears of a nuclear crisis at the Fukushima Daiichi plant have hurt travel demand in the country.

Domestic demand grew in China, but at a slower rate.

Its domestic market grew by 10.8% in April, compared with 15% growth during the same month last year.

Giovanni Bisignani, IATA's Director General said growth in China slowed: "as a result of tighter economic policies".

International travel There was some good news for the industry as IATA said that international air travel grew by 16.5% in April, compared with last year.

"Demand improved significantly in April. Eliminating all distortions, we are growing at 3-4%," said Mr Bisignani

"International traffic is now 7% above the early 2008 pre-recession levels," he added.

The numbers were boosted by a spike in European air travel, which grew by 29%.

However, IATA said that Europe's numbers were high as travel in the region was severely affected last year by the volcanic ash crisis.

Despite the encouraging numbers, IATA warned that there were tough times ahead.

"Despite the enormous restructuring over the last decade, the industry is not shock-proof," said Mr Bisignani.

"Maintaining the high load factors needed to support profitable growth will be difficult, given the ongoing challenge of matching capacity to volatile demand," he added.

Mr Bisignani also said that the industry's profit margins had been hit by a series of crises and natural disasters in the first half of this year and that is likely to have an effect on growth.

View the original article here

Japan beats deflation in April

27 May 2011 Last updated at 09:37 GMT Japan has been fighting falling prices for more than a decade Japan has beaten deflation for the first time in two years, as fuel imports surged following the earthquake and tsunami.

Consumer prices rose by 0.6% in April, from a year earlier, according to the Statistics Bureau.

However, credit ratings agency Fitch has downgraded its outlook on Japan's debt to negative from stable.

Fitch said it was worried about the high levels of Japanese government debt.

"Japan's sovereign credit-worthiness is under negative pressure from rising government indebtedness," said Andrew Colquhoun of Fitch.

"A stronger fiscal consolidation strategy is necessary to buffer the sustainability of the public finances against the adverse structural trend of population ageing."

In January this year, rating agency Standard & Poor's downgraded Japan's credit rating from AA to AA-, also citing Japan's worsening debt situation for the move.

One-off?

The rise in Japan's core consumer price index in April, which excludes food prices, was largely in line with expectations.

Including food, consumer prices rose by 0.3% in April, compared with a year earlier.

Japan has been battling deflation, or falling prices, for more than a decade.

Continue reading the main story

Although I expect consumer spending will recover in May and the months ahead in the wake of the disaster, wages and salaries haven't risen.”

End Quote Hiromichi Shirakawa Chief economist, Credit Suisse While potentially positive for bargain-hungry shoppers, deflation actually leads to companies and most consumers putting off purchases, in hopes that prices will continue to fall.

The April data is unlikely to reverse that trend, because the gains came largely from higher fuel prices.

The 11 March earthquake and tsunami left more than 24,000 people dead or missing.

It also destroyed some of Japan's ability to generate electricity.

The country has been importing large amounts of fuel in order to make up the difference.

"The commodities and crude oil prices are pushing the inflation figures up," said Credit Suisse chief economist Hiromichi Shirakawa.

"Although I expect consumer spending will recover in May and the months ahead in the wake of the disaster, wages and salaries haven't risen."

He added: "I'm concerned about consumer spending towards the summer".

Japan's economy, the world's third largest, has slid back into recession after the devastation caused by the earthquake and tsunami.

Gross domestic product shrank 0.9% in the first three months of the year.

Japan's economy has now contracted for two quarters in a row, the generally accepted definition of a recession.

View the original article here

UK borrowing reaches April record

24 May 2011 Last updated at 10:11 GMT April's borrowing figure was higher than analysts expected The UK saw its worst April public sector net borrowing on record last month as tax receipts fell, the Office for National Statistics said.

Public borrowing, excluding financial interventions such as bank bail-outs, hit ?10bn, compared with ?7.3bn the previous year.

The ONS said tax receipts in April last year were boosted by a one-off bank payroll tax which raised ?3.5bn.

April's figure was higher than many analysts' expectations of about ?6.5bn.

Economists said the figures were a surprising disappointment.

"The public finances have got off to a pretty bad start this year," said Hetal Mehta, at Daiwa Capital Markets. She warned that the position could worsen if economic growth was weaker than expected.

Samuel Tombs, at Capital Economics, said he believed the government would struggle to meet its borrowing forecasts this year.

Continue reading the main story Hugh Pym Chief economics correspondent, BBC News

On the face of it these are embarrassing figures for the government - embarking on a deficit reduction programme, they have begun the financial year with record borrowing.

The government borrowed nearly ?10bn in April, up from just over ?7bn a year earlier.

But the Treasury argues that whereas the April 2010 figures benefited from the one-off bank bonus tax payment - the new bank levy is spread more evenly across the year.

And there was brighter news for George Osborne with last year's borrowing total now revised down by ?2bn.

However, he added: "Nonetheless, these are just one set of figures and the trend in borrowing should improve as more of the spending cuts kick in later this year."

There was some good news for the government as borrowing figures for the year to March 2011 were revised downwards to ?139.4bn, from ?141.1bn.

The revision was mainly due to the tax take being boosted from a rise in VAT to 20% from 17.5%, said the ONS.

But the higher-than-expected borrowing in April pushed the government's debt to a record ?910.1bn, or 60.1% of GDP.

A spokesman for the Treasury said: "One-off factors affected borrowing, but it is clear from the downward revision to last year's borrowing figures that the government's deficit reduction strategy is making headway in dealing with our unsustainable deficit."

Government spending in April was 5% higher than a year ago at ?54.1bn.

Restoring stability

David Kern, chief economist at the British Chambers of Commerce, said it was clear that the government's plans to reduce the deficit by more than ?20bn over the year was proving difficult.

But he said the government must press on with its plans. "The fragility of the economic recovery is creating a difficult backdrop, but the government must not deviate from its strategy to restore stability in the UK's public finances," he said.

"Businesses support the measures being taken to reduce the deficit, and the emphasis should be on spending cuts rather than tax increases," Mr Kern said.

View the original article here

US new home sales rise in April

24 May 2011 Last updated at 15:24 GMT New-home sales make up only a small proportion of the US housing market US new home sales rose for the second month in a row in April, climbing 7.3% on the month before, figures show.

April sales came in at a seasonally adjusted annual rate of 323,000 homes, the Commerce Department said, which was stronger than analysts had forecast.

But sales are still at historically low levels and April's figure was 23.1% below that of April 2010.

In February 2011, new-home sales had fallen to a rate of 278,000, the lowest since records began in 1963.

The better-than-expected improvement in April signals a slight pick-up in the depressed construction sector.

However, in terms of total sales, new home sales represent only a small portion of the US housing market.

Sales of previously-owned homes unexpectedly fell by 0.8% in April to an annual rate of 5.05 million, the National Association of Realtors said last week.

And despite mortgage rates being at historic lows and rock-bottom house prices, would-be homebuyers face high unemployment and a weak economic recovery.

View the original article here

Indian inflation slows in April

16 May 2011 Last updated at 09:31 GMT Analysts believe more rate rises from the Indian central bank are likely India's inflation rate eased in April, but was still higher than expected as fuel and food prices remained high.

The main wholesale price index was up 8.66% in April from a year ago, but was less than the 9.04% rise seen in March.

Food prices in India remain extremely high. The cost of fruit has gone up by a third in the past year.

The figures comes as the government is expected to announce an increase in state-controlled prices of diesel and cooking gas.

Supporters of the main opposition party, the BJP, blocked roads and rail tracks in protests against a rise in state fuel prices.

But the Congress Party-led ruling coalition does not face new tests at the polls until early next year after last week's state elections, giving it the opportunity to raise fuel costs.

And state-run refiners raised petrol prices by 5 rupees (11 cents, 6 pence) a litre from Sunday, almost 9%, a record increase that is likely to fuel inflation in Asia's third-largest economy.

The Reserve Bank of India has raised interest rates nine times since March 2010 and economists expect it to do so again in June and July.

View the original article here