Aurelia Butler

The UK economy grew to above its pre-pandemic level for the first time in November, supported by increasing momentum across all industries before the Omicron coronavirus variant hit the country.Output rose 0.9 per cent between October and November, accelerating strongly from near-stagnation in the previous month, according to data from the Office for National Statistics. This was much higher than the 0.4 per cent forecast by economists polled by Reuters and the highest rate since June.The increase took gross domestic output, or GDP, to 0.7 per cent above its level in February 2020, before the first Covid-19 restrictions, indicating that the economy had fully recovered the ground lost during the pandemic.Grant Fitzner, ONS chief economist said: “The economy grew strongly in the month before Omicron struck with architects, retailers, couriers and accountants having a bumper month.”He added that construction also recovered from several weak months as many raw materials became easier to obtain. Dean Turner, economist at UBS Global Wealth Management, said the much stronger than expected GDP data showed that the UK economy was “in good shape as it entered into the latest wave of the pandemic”.However, the trend is expected to be reversed in December following a surge in Covid-19 infections and self-isolations linked to the spread of Omicron.“GDP almost certainly dropped in December, as households hunkered down in response to the Omicron variant,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.November’s data show that growth was boosted by strong consumer demand and easing supply chain disruption for manufacturers and the construction industry.Services, which account for about 80 per cent of the economy, grew 0.7 per cent, supported by strong growth in professional, scientific and technical activities. The retail, courier and warehousing sectors also expanded, driven by stronger than usual Black Friday sales and the build-up to Christmas. Accommodation, arts and entertainment all performed well. Manufacturing also recorded strong growth, of 1.1 per cent, with output increasing in most sectors, including car production where manufacturers reported improvements in sourcing parts.Construction rebounded by 3.5 per cent, the fastest monthly rise since March. This was supported by strong new private housing activity, with builders suggesting some of the issues in sourcing products over recent months had eased.UK goods exports continued to underperform other countries’ performance, contracting 1 per cent between October and November. In contrast, imports were boosted by strong domestic demand. The ONS said that if there were no other data revisions, GDP for the fourth quarter would either reach or surpass its pre-coronavirus level of the last quarter of 2019, provided the monthly December 2021 estimate did not fall by more than 0.2 per cent.In the third quarter, UK output was still 1.5 per cent below its pre-pandemic level, a larger gap than any other G7 country. In the US, the economy recovered from the hit of the health crisis in the second quarter. Some economists said they expected the recovery to quickly regain momentum after the Omicron wave. Turner said Omicron’s impact on the economy would be “less devastating” than previous waves and predicted the economy would “recover reasonably swiftly” from January.The trend, together with high inflation “will keep the Bank of England in a hawkish mood, with further [interest rate] hikes likely in the months ahead”.But, Yael Selfin, economist at KPMG UK, warned that “rising taxes and borrowing costs, as well as elevated inflation, will squeeze households’ purchasing power”, weighing on growth. More

China’s trade surplus soared to its highest level on record last year as a sustained boom in exports helped counter a loss of momentum across the country’s wider economy.Official data released on Friday showed that China’s trade surplus was $676bn for 2021, 26 per cent higher compared with the previous year.Exports were 30 per cent higher at $3.36tn for the full year, with December’s year-on-year growth of 21 per cent adding to a streak of double-digit gains in every single month in 2021.The data highlighted China’s dominance of global trade during the coronavirus era, during which its manufacturing industry has benefited from a shift around the world from services to goods consumption.The trade data came ahead of the release on Monday of fourth-quarter gross domestic product figures, which are expected to reflect wider challenges as the country’s economy grapples with lingering weakness in consumption, a property slowdown and strict measures to contain the virus.“External demand was probably the biggest growth driver last year,” said Larry Hu, chief China economist at Macquarie, who suggested it “helped offset the slowdown in property and the very weak consumption”.

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After a deep fall in early 2020, Chinese exports began to rise sharply soon after domestic cases of the virus slowed to a trickle and as lockdowns were imposed in other countries around the world. Exports continued to climb through 2021 despite widespread delays and blockages across global supply chains.“China’s supply chain capacity has held up much better than the rest of the world, so it gets a larger share of the pie [for trade],” Hu said.But apart from a wave of defaults across its property industry centred around heavily-indebted developer Evergrande, China has also shown signs of strain from its strict pandemic strategy to minimise Covid cases, which has curbed consumer activity.

Authorities have imposed stringent lockdowns in the cities of Xi’an and Tianjin in recent weeks ahead of the Winter Olympics in Beijing next month.Louis Kuijs, head of Asia economics at Oxford Economics, noted that “while Covid restrictions cause some disruption to China’s exports, they don’t appear to have a significant aggregate impact amid successful efforts by firms and local governments to keep production going”.But Kuijs and other analysts have forecast a slowdown in export growth for 2022, pointing to a peak in foreign demand last year. Export growth year on year in China has slowed every month since September, when it hit 28 per cent. In December, the country’s imports grew 20 per cent year on year. More

SEOUL (Reuters) – South Korea’s central bank raised its benchmark rate back to where it was before the pandemic on Friday, seeking to restrain inflation and household debt growth as global policymakers move to end emergency stimulus to contain rapid consumer price rises.The Bank of Korea’s monetary policy board lifted borrowing costs by 25 basis points to 1.25%, the highest since March 2020, a move expected by 25 of 35 analysts in a Reuters poll.South Korea has been at the forefront of global stimulus withdrawal as central banks start to shift away from the view that faster inflation that came as a byproduct of the pandemic is transitory. Soaring inflation has been ramping up pressure on policy makers to act, as consumer inflation for the whole year of 2021 surged to 2.5%, the fastest since 2011 and outpacing the BOK’s 2.3% projection made in November. Analysts now see the current tightening cycle slowing down in the months ahead, as policymakers assess the outlook for global growth while countries navigate a fresh wave of the Omicron variant of the coronavirus.The Federal Reserve has signalled its intention to raise rates three times this year, the effects of which will be closely watched globally, while in China authorities are seen easing policy to cushion a slowdown in the world’s second largest economy. Governor Lee Ju-yeol has said that a rate hike in the first quarter is possible if the current economic recovery remains on track.The BOK expects the economy to expand 3% this year, slowing from an estimated 4% in 2021.Uncertainties on the policy front this year include Governor Lee’s term that ends in March this year, which coincides with the nation’s presidential election slated for the same month.It is unclear whether President Moon Jae-in will name a new governor before the election or leave that decision to the next leader of the country. “Going forward, one more rate hike is likely in the second half after the presidential election and the BOK reshuffle, and policymakers should allow themselves some time to monitor Fed’s moves,” said Stephen Lee, an analyst at Meritz Securities.Governor Lee’s news conference starts at 0220 GMT, his second last before he steps down in March.Separately, the government has decided to draw up a supplementary budget and submit it to parliament this month, the prime minister said on Friday, adding to a record 607.7 trillion won ($511.41 billion)budget for 2022.($1 = 1,188.2800 won) More

WASHINGTON (Reuters) – U.S. Senator Kyrsten Sinema rejected President Joe Biden’s plea to jettison the Senate’s filibuster https://www.reuters.com/legal/government/us-senate-democrats-mull-ending-filibuster-pass-voting-rights-reform-2022-01-11 rule to allow Democrats to pass a voting-rights bill, all but ensuring the bill’s failure.Sinema called the measure a critical tool to tamp down the nation’s deepening political divisions, while fellow centrist Democratic Senator Joe Manchin said removing the guardrail would allow simple majorities to ram through extreme legislation.Sinema took to the Senate floor to reiterate her opposition shortly before Biden met with fellow Democrats in the Senate to urge them to unite around the idea and pass a law he said was critical to offsetting a wave of new restrictions on ballot access passed in Republican-led states.She blasted the wave of new laws restricting ballot access in Republican-led states as undemocratic, but said she would not agree to change the Senate’s rules to pass a federal law countering them.”I will not support separate actions that worsen the underlying disease of division in our country,” Sinema said. “Some have given up on the goal of easing our divisions and uniting Americans. I have not.”After the meeting, Biden acknowledged that the bill might not succeed due to the pair’s opposition to the rule change.Manchin later reiterated his opposition to the move, saying, “Ending the filibuster would be the easy way out.”The chamber’s 50 Republicans are united in opposition to the voting-rights reform bill, which they dismiss as a partisan power grab. Democrats need all 50 of their votes in the upper chamber to agree to change the filibuster.Sinema said that previous changes to the filibuster proved to be mistakes.”These shortsighted actions by both parties have led to our current American judiciary and Supreme Court, which as I stand here today is considering questions regarding fundamental rights Americans have enjoyed for decades,” Sinema said.Democrats in 2013 eliminated the 60-vote threshold for most administration nominees, and Republicans followed up in 2017 and did the same thing for Supreme Court nominees. That cleared the way for Republican President Donald Trump to name three conservatives to the court in his four years in office, establishing a 6-3 majority.Sinema’s speech was attended by more Republican senators than those of her own party.Senate Minority Leader Mitch McConnell, who was present on the floor for her speech, told reporters afterwards that it was “extraordinarily important” and said that Sinema’s “act of political courage” had “saved the Senate as an institution.” More

“The country has decided to draw up a supplementary budget to closely support small business owners and self-employed people by making use of excess tax generated last year and other available financial resources,” Prime Minister Kim Boo-kyum said, without disclosing further details.The announcement comes a month after the parliament approved a record 607.7 trillion won ($512 billion) budget for this year.($1 = 1,186.1000 won) More

TOKYO (Reuters) -Japan’s wholesale prices rose 8.5% in December from a year earlier, data showed on Friday, increasing for a 10th month in a sign higher raw material and fuel costs continued to weigh on corporate margins.The rise in the corporate goods price index (CGPI), which measures the prices companies charge each other for their goods and services, slowed from a revised 9.2% spike in November. It compared with a median market forecast for a 8.8% gain.The persistent cost pressures, coupled with a weak yen that inflates the price of imported goods, add to the pain for the world’s third-largest economy as it emerges from a consumption slump caused by the coronavirus pandemic.While Japan has not been immune to the impact of rising commodity inflation, firms have been cautious about passing on higher costs to consumers on concerns cost-sensitive households may hold back on spending.Core consumer prices rose just 0.5% in November from a year earlier, far modest than the jump in wholesale inflation and well below the central bank’s 2% target. More