Consumer Market Scan for the Beginning of the Tiger Year
Source: CTEI Date: 2010-03-15
Substantial progress has been achieved by the authorities in all areas of macroeconomic statistics in the beginning of the tiger year. Domestic demands serve the major factor stimulating development of the textile industry. Although the textile industry has seen a recovery, international trade environment does not clear up and risks still exist.
As China celebrates the arrival of the new lunar year, the Year of the Tiger, the world hopes China's economy will roar again in 2010, after it helped pull the global economy out of recession in 2009, the Year of the Ox. Boosted by a raft of stimulus measures, China's economy expanded 8.7 percent in 2009, staging a speedy recovery after being hit by the worst global financial crisis in eight decades. The January trade data provided solid evidence of growth consolidation, with exports jumping 21 percent year-on-year and imports surging 85.5 percent.
One thing to be noticed is that fears about the wobbling economies of Europe and Japan as well as an unexpected increase in U.S. jobless post new challenges for the world economic recovery.
Bullish on domestic market
China's retail sales hit 340 billion yuan during the "golden week" of Spring Festival, up 17.2 percent over the same period of last year, the Ministry of Commerce said Friday. Boosted by various sales promotion activities, the weeklong Spring Festival holiday, which started from February 13 this year, is China's closest equivalent to the West's Christmas shopping season. Garment products were in great demand during the festival. Sales of garment grew 17.7 percent year on year.
According to China Commerce Information Center, China's retail sales by top 100 major retailers hit 4.33 billion yuan during the "golden week" of Spring Festival, up 24.45 percent over the same period of last year.
It is fair to say that China's stimulus incentives did spur the consumption growth. But, China will face the issue of withdrawing its economic stimulus package sooner or later, central bank governor Zhou Xiaochuan remarks at a press conference on the sideline of the National People's Congress, the country's top legislature.
Global economic recovery fragile
Economic activity in the global manufacturing sector expanded in February for the seventh consecutive month. Manufacturing continued to grow in February, but the rate of growth decelerated as the PMI registered 56.5 percent, a decrease of 1.9 percentage points when compared to January's seasonally adjusted reading of 58.4 percent; U.S. retail sales rose 0.5% on a seasonally adjusted basis in Jan.; Retail sales in Japan climbed 2.6 percent in January compared to the previous year. However, fears about the wobbling economies of Europe and Japan as well as an unexpected increase in U.S. jobless post new challenges for the world economic recovery in 2010.
U.S.: an unexpected increase in jobless
Initial claims for U.S. state unemployment benefits rose 22,000 to 496,000 in the February 20 week after seasonal adjustment, according to data released by the U.S. Labor Department. The Great Recession may be over, but this era of high joblessness is probably just beginning. Before it ends, it will likely change consumption habits of American. The disappointing jobless figures follow a sharp drop in consumer confidence earlier, which was pulled back by growing anxiety about the labor market. The Conference Board's U.S. consumer confidence index fell in February to 46.0 from an upwardly revised 56.5 in January, the private business research group reported.
EU: economic sentiment falling
Economic sentiment in the 16 countries that use the euro worsened in February for the first time in nearly a year, the European Commission said, in a further sign that the recovery from recession has lost momentum. With sentiment fragile and debt worries mounting across the single currency area, particularly in Greece, the Commission said it was sticking to its November forecast that the eurozone economy would grow by a very modest 0.7 percent this year. The consumer confidence indicator fell by 1 point to -17 in line with market expectations. Consumers' perception of the general economic outlook and increasing unemployment fears, especially in Spain and in Italy, contributed to the overall deterioration.
Japan deflationary pressure in the economy
Japan's core consumer prices fell 1.3 percent in the year to the end of January, marking the 11th straight month of annual declines and highlighting the deflationary pressure in the economy. The pace of drop was unchanged from December as retailers remain under pressure to cut prices to woo more consumers amid falls in wages. Besides, there was a possibility that the current crisis at Toyota Motor Corp, which has led to a recall of millions of vehicles across the world, could have an impact on Japan's economy.
Although the Chinese textile industry has seen a recovery, international trade environment does not clear up and risks still exist.
