US prices up as Japanese surplus balloons
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Your support makes all the difference.OFFICIAL US figures yesterday pointed to continued weakness in the American economy, offering little prospect of an early recovery as Japan announced a record trade surplus due to weakening demand for imports, writes Peter Torday.
US wholesale prices rose 0.3 per cent in September, the largest increase in five months, due largely to a jump in petrol and tobacco prices. Excluding these volatile movements wholesale prices rose 0.2 per cent in September after a 0.1 per cent fall previously.
Similar signs of subdued economic activity emerged from figures showing a moderate rise in US retail sales. Overall sales increased 0.3 per cent after a flat performance in August. Excluding cars, sales rose 0.2 per cent in September after a 0.1 per cent increase previously. Both figures suggest few signs of life in the US economy.
The weak figures and remarks by Alan Greenspan, chairman of the US Federal Reserve, suggested that US interest rates could be cut again, despite fading expectations of a reduction before the November presidential elections. Mr Greenspan repeated his concern that the recovery was far too modest, restrained by high consumer and business debt.
Japan announced that it chalked up a record trade surplus in September and economists predict the trend could continue in the absence of recovery. The Ministry of Finance said the trade surplus grew to dollars 12.07bn from dollars 9.66bn in the same month a year earlier. In the first six months of the fiscal year, the surplus ballooned to dollars 52.46bn from dollars 39.68bn in the same period a year ago.
The figures may provide further ammunition to US critics of Japan, who are advocating a tougher line on trade with Tokyo during the current presidential election campaign.
Japan's weak domestic economy is forcing manufacturers to redouble their efforts to boost exports and the trend is likely to continue, Japanese economists believe.
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