WTO warns of downside risks from second wave of Covid-19 infections. Global trade is showing signs of recovering from the deep pandemic-induced slump, but a full rebound will take longer and may be disrupted by the ongoing effects of Covid-19, to the World Trade Organisation (WTO) said on Tuesday. However, it warned of downside risks from a resurgence of infections over the coming months. The global trade body now estimates a 9.2 percent drop in the volume of world merchandise for 2020, compared with its forecast in April of a 12.9 percent drop in trade. Global trade is now forecast to grow by 7.2 per cent in 2021, compared with the previous estimate for a 21.3 percent expansion. However, that still remains well below the pre-pandemic level.
US consumer borrowing falls on smaller credit-card balances. US consumers cut back on their borrowing in August, with credit card use falling for a sixth consecutive month, reflecting caution in the midst of the pandemic-triggered recession. The Federal Reserve said on Wednesday that total borrowing fell by $7.2 billion after a gain of $14.7 billion in July. The decline in August was the first since a $12 billion fall in May when pandemic-driven shutdowns ground the economy to a virtual halt. Consumer borrowing is closely watched for signals it can send about households' willingness to take on more debt to support their spending, which accounts for 70 percent of economic activity in the US. Economists say they expect to see a resumption in credit card growth in the coming months but that the gains will likely be limited.
Drop in German industrial output casts shadow on recovery. German industrial output inched lower in August following three months of relatively strong increases, suggesting the recovery in Europe’s largest economy is starting to lose steam. Figures released by the Federal Statistics Office on Wednesday showed that industrial output fell by 0.2 percent in August compared to July, after an upwardly revised rise of 1.4 percent in July and a jump of 9.3 percent in June. Economists had forecast an increase of 1.5 percent for August. Factories produced fewer capital goods and consumer goods, with a particularly steep decline in vehicle production. “At least a part of the fall in car output was due to more companies implementing their summer shutdowns in August this year,” Andrew Kenningham from Capital Economics said.
UK mortgage applications at 12-year high as house prices keep rising. Mortgage applications in the UK have surged to a 12-year high as house prices rose at the fastest annual rate since mid-2016, mortgage lender Halifax reported. Halifax said the market was fuelled by a desire for more space, with more people working from home during the Covid-19 pandemic, but warned that rising unemployment and recession would suppress demand further out. The average price of a home rose by 1.6 percent to £249,870 in September from August, marking the third month of solid gains, Halifax said.
China's services activity accelerates at solid pace in September. China's service sector showed a strong growth in business activity in September, signalling a continued recovery from the Covid-19 pandemic. The Caixin composite services Purchasing Managers' Index, or PMI, rose to 54.8 in September from 54.0 in August. This was the fifth consecutive increase in service sector output. The expansion was supported by a sustained rise in total new business. Stronger domestic demand was the main factor that underpinned new output as export orders contracted again. Firms raised their workforce numbers for the second consecutive month. On the price front, the survey showed that the rate of input price inflation declined to a three-month low.