Economic news--China takes the lead in the global recovery

摘要

The US housing sector has continued to gain momentum in June with new home sales rising for a third consecutive month, by 11%. Housing starts climbed to a seven-month high of 582,000 and existing home sales rose to 4.9 million. Furthermore, the number of months' supply of unsold homes reached a twenty-month low of 8.8, pointing to further reduction in excess supply on the market. However, activity remains relatively weak compared to pre-recession levels and the downward pressure on house prices will persist for several months to come. This is not least due to the presence of a high number of foreclosed homes on the market. And while the second quarter improvement in the sector is certainly encouraging, its overall contribution to GDP is modest. Aggregate industrial production continued to fall in June albeit by only 0.4%, the smallest monthly decline in eight months. The breakdown suggests a slowdown in the pace of the deterioration in business investment, with the manufacturing sector close to a bottom. And while we expect industrial production and capacity utilisation rates to begin to recover towards the end of the third quarter, we will continue to see underlying weakness in consumer spending as the labour market conditions continue to deteriorate. Nevertheless, once the US economy has hit bottom in the current quarter, we expect to see a return to positive growth in the fourth quarter and a contraction in GDP of 2.8% in 2009 as a whole.