Business

Sun Jul 13 20:37:28 PDT 2008

Panel: U.S. recession risks rise

The Blue Chip Economic Indicators survey found that 55% of economists polled say the U.S. will enter into a recession this year or already has due to higher energy prices, a weakening labor market and falling stock prices. That's up from 47% in the prior month. Respondents raised their Q2 GDP growth estimates to 1.2% from 0.4% due to tax rebate checks. But the outlook has worsened. Rising inflation risks will spur the Fed to hike rates, perhaps this fall, the survey found.

U.K. home prices in record fall

June housing values sank 8.7% vs. a year ago, the worst drop in at least 2 decades, says HBOS, the U.K.'s top mortgage lender. Prices fell 2% vs. May alone. After a U.S.-style housing boom, Britain is suffering a U.S.-style bust. Mortgage approvals have more than halved vs. a year earlier while home loan rates soar as banks tighten credit. Other reports suggest widespread economic trouble and a rising risk of a recession.

The Bank of England left rates at 5%, as expected, squeezed by rising inflation and fast-slowing growth. French, Italian output fall sharply

French industrial production sank 2.6% in May, the worst monthly fall since Oct. '05. Economists expected a 0.5% drop. Italian production fell 1.4%, more than twice as bad as expected and the worst in 8 months. The data from the No. 2 and No. 3 euro zone economies follow Mon.'s report of a 2.4% drop in No. 1 Germany. Output in noneuro U.K. fell to its lowest level in 2 years in May.

China export engine downshifts

China's trade surplus was $21.35 bil in June, up from $20.2 bil in May but well below the $26.9 bil in June '07 and views for $22.4 bil. Exports rose 17.6% vs. a year earlier, down from May's 28.1%, adding to fears that weakening demand overseas is starting to hit the economy. The latest figures could add to resistance vs. a further rise of the yuan.

Singapore's economy fell at a 6.6% annual rate in Q2, the worst in 5 years as exports to the U.S. and Europe dived. A steep drop in volatile drug output had a huge impact. COMING UP FRIDAY

U.S. trade balance for May, 8:30 a.m. EDT (forecast: -$62.2 bil). Import and export prices for June, 8:30 a.m. EDT.

Source: Investor’s Business Daily