Aurelia Butler

The Westpac-Melbourne Institute index of consumer sentiment released on Wednesday slipped 1.3% in February from January, when it dropped 2.0%.The index was down 7.6% from February last year at 100.8, meaning optimists only just outnumbered pessimists.”The most likely explanations for these elevated pressures on finances relate to: Omicron-related disruptions to activity and earnings at the start of the year; the rising cost of living; and the prospect of rising interest rates,” said Westpac chief economist Bill Evans.The cost of petrol alone has climbed 15% over the past two months, while supply bottlenecks have pushed up goods prices and the cost of building new homes. Rents have also been on the rise, leading to a sharp fall in sentiment among tenants.The impact was clear in the survey’s measure of family finances compared with a year ago which dived 9.3%, while the outlook for finances over the next 12 months fell 1.5%.The survey’s measure of whether it was a good time to buy a major household item eased 0.3%, while the ‘time to buy a dwelling’ index fell 2.4%.That contrasted with a slight improvement in the economic outlook for the next 12 months which added 2.5% after a steep drop in January, while the outlook for the next five years rose 1.5%.Media speculation about a rise in interest rates from the Reserve Bank of Australia (RBA) saw the proportion of respondents expecting an increase in mortgage rates over the next 12 months lift to 66% in February, from 55% the month before. More

WASHINGTON (Reuters) -U.S. goods exports to China fell in December, cementing a massive shortfall in Beijing’s two-year purchase commitments under the “Phase 1″ trade deal negotiated by former President Donald Trump’s administration.The U.S. Census Bureau said on Tuesday that the United States’ 2021 goods trade deficit with China rose by $45 billion, or 14.5%, to $355.3 billion, the largest since a 2018 record of $418.2 billion.The 2020 gap was $310.3 billion, a 10-year low driven by coronavirus pandemic lockdowns.The global U.S. trade deficit in 2021 surged 27% https://www.reuters.com/business/us-trade-deficit-rises-december-deficit-2021-largest-record-2022-02-08 to a record $859.1 billion as businesses restocked inventories to meet robust demand.NO EXTRA PURCHASESThe data showed China missed by far its commitments to purchase an additional $200 billion worth of U.S. farm and manufactured goods, energy and services above 2017 levels – the year before a bitter trade war embroiled the world’s two largest economies.The purchase commitments were the centerpiece of Trump’s Phase 1 trade deal https://ustr.gov/sites/default/files/files/agreements/phase%20one%20agreement/Economic_And_Trade_Agreement_Between_The_United_States_And_China_Text.pdf with China, which launched in mid-February 2020 and halted a threatened escalation of tariffs. The deal also called for China to grant increased U.S. market access to its agricultural biotechnology and financial services sectors and mandated some intellectual property protection improvements.An analysis of final 2021 Census trade data compiled by economist Chad Bown of the Peterson Institute for International Economics showed China met just 57% of its full two-year goods and services targets.Beijing’s purchases of the goods, energy and services targeted in the Phase 1 agreement were not even enough to return to China’s baseline 2017 level of purchases of U.S. imports after retaliatory tariffs had eroded them in 2018 and 2019, he said.”Put differently, China bought none of the additional $200 billion of exports Trump’s deal had promised,” Bown said in his analysis https://www.piie.com/blogs/realtime-economic-issues-watch/china-bought-none-extra-200-billion-us-exports-trumps-trade. China exceeded the 2017 baseline in agricultural purchases, but only reached 83% of the $73.9 billion two-year farm goods target, Bown’s analysis showed.Services exports to China, which had been a bright spot for U.S. trade, fell sharply as the pandemic slashed Chinese tourism and business travel to the United States and cut the flow of Chinese students to U.S. universities, reaching only 52% of the target.The U.S. Trade Representative’s office and China’s embassy in Washington did not immediately respond to queries about the data.Deputy U.S. Trade Representative Sarah Bianchi said last week it was “really clear that the Chinese haven’t met their commitment in Phase 1” and the Biden administration was working with Chinese officials https://www.reuters.com/world/us/us-trade-official-says-china-failed-meet-phase-1-commitments-2022-02-01 to address the matter.SERIOUS INTENT U.S. officials also told Reuters early on Monday they wanted concrete action https://www.reuters.com/business/exclusive-us-calls-concrete-action-china-meet-phase-1-purchase-commitments-2022-02-07 from Beijing to close the shortfall in its purchase commitments and would continue current talks if Chinese officials “show serious intent to reach an agreement on their purchase commitments.”China has sought the removal of tariffs on hundreds of billions of dollars of goods that were left in place by the Phase 1 deal.The agreement contains a clause that the two parties “project that the trajectory of increases” in China’s purchases “will continue in calendar years 2022 through 2025” without specific targets.Former USTR chief of staff Jamieson Greer, who helped negotiate the Phase 1 deal, said that clause could be used to pursue “retrospective enforcement for what’s been missed.””It’s in the interest of the administration to pursue enforcement,” said Greer, a trade lawyer with King and Spalding.”With a few kind of narrow exceptions, we haven’t really seen that much enforcement” on trade matters from the Biden administration, he added. More

WASHINGTON (Reuters) -The U.S. House of Representatives on Tuesday approved legislation to fund federal government agencies through March 11 and avoid a chaotic shutdown of many of Washington’s operations when existing money expires at midnight on Feb. 18.The House voted 272-162 to approve the stop-gap measure that will give Democratic and Republican negotiators in the House and Senate an additional three weeks to work out a deal on a full-year funding bill.The temporary measure — the third since the start of the fiscal year that began on Oct. 1 — now goes to the Senate, where Majority Leader Chuck Schumer has promised prompt action.Negotiators have been struggling for weeks to agree on the so-called “omnibus” spending bill to finance the federal government’s wide-ranging activities through Sept. 30, the end of the current fiscal year.During House debate, Appropriations Chair Rosa DeLauro noted that the “omnibus is the only way to unlock” the full $1 trillion in spending on infrastructure projects authorized by Congress late last year.The measure would also beef up spending on defense and veterans programs, along with environmental, education and other domestic initiatives. Schumer also expressed confidence that a full-year funding bill would be set in place by March 11.Meanwhile, Senator Richard Shelby, the senior Republican on the Senate Appropriations Committee, told reporters negotiators were nearing a deal on top-line spending for such a bill. That figure might hover around $1.5 trillion.Republicans were insisting the money be equally divided between defense and non-defense programs, while Democrats who control Congress fashioned bills providing slightly more money on the non-defense side of the ledger.Once the framework of a bill is sketched out through an overall spending level, negotiators are expected to dive into resolving disagreements over specific line-items, such as environmental programs and border security, while also settling perennial battles over policies related to divisive issues such as abortion and Internal Revenue Service activities.”With these basic things, a bipartisan deal should be achievable,” Senate Republican Leader Mitch McConnell said in a speech on the Senate floor. More

Consumers are still waiting up to nine weeks for delivery of new iPads, as Apple struggles to clear a backlog that emerged last year during the global chip and component crunch, according to Nikkei Asia’s analysis of more than two months of shipping data.Nikkei Asia has been tracking the delivery times for Apple products in 25 key countries and regions, including the US, China and Japan, since early November. Customers ordering a new iPad (64GB model) on Apple’s website on January 28 faced an average wait of about 50 days, a slight improvement from the 55-day delivery times for iPad orders placed in early December.Wait times for new iPhones, meanwhile, have shrunk dramatically, from more than a month late last year to about 10 days for some models.Apple chief executive Tim Cook told investors on the latest earnings call that the iPad was the only product category that did not grow in the October to December quarter due to the supply constraints. “But overall we do see an improvement in the March quarter in terms of the constraints going down versus what they were in the December quarter,” he added.Nikkei Asia’s latest analysis, however, shows that some Asian markets still face lengthy wait times. Consumers in the Philippines, for example, would have to wait up to 63 days if they ordered a space grey, 256GB iPad on January 28. For consumers in Malaysia, the wait time is around 54 days, the data indicate.

Apple has said the shortage of so-called legacy node chips has hit the iPad particularly hard, leading to revenue for the segment dropping 14.1 per cent on the year to $7.3bn in the three months through December. Legacy nodes are the less sophisticated semiconductors that handle tasks such as power management and display functions. “Since iPads have greater than 8-inch displays, they need a lot of display drivers and unfortunately display drivers are produced at legacy process nodes — which is at the core of the semiconductor supply crunch,” said Wayne Lam, senior director of research at CCS Insight, a London-headquartered research firm.Despite a reputation as the world’s top procurement power, Apple was not able to avoid supply constraints last year as the global supply crunch hit a wide range of industries. To cope, the company began reallocating some shared components from the iPad line to the new iPhone 13 series to ensure smooth production of its flagship product ahead of the holiday season.By early December, Apple saw signs of improvement in the supply chain and told iPhone assemblers to gear up production ahead of the Lunar New Year to meet consumer demand for the various holiday seasons around the world.

As a result, delivery times for the latest iPhones and Apple Watch have shortened significantly. For the 256GB iPhone 13 Pro, the delivery time on average for 25 key countries has shortened to about 10 days, Nikkei Asia’s analysis shows. This is down from around a month for orders placed in mid-November. Apple Watch 7 delivery times also fell to about 10 days from more than a month over the same period.Differences in display types, not just size, are another factor in the diverging wait times, according to Lam, who pointed out that iPads use LCD displays, while iPhones and Apple Watches use more advanced OLEDs.“LCD display drivers are heavily reliant on legacy silicon process nodes to produce,” Lam explained. “OLED displays tend to require less and use more advanced silicon processors.”Compared to supplies of legacy node chips, those of advanced silicon processors are less constrained because of the relatively smaller demand and high priority that chipmakers place on their production because of the more lucrative returns.A version of this article was first published by Nikkei Asia on February 2 2022. ©2022 Nikkei Inc. All rights reservedRelated storiesChina’s smartphone market grows for 1st time in 5 yearsApple sets revenue record despite $6bn-plus supply chain woesTokyo exchange’s ‘prime’ offering not lean enough, pros sayApple’s nightmare before Christmas: Supply chain crisis delays gift deliveries More