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Eurozone falls into deflation for first time since October 2009

Eurozone Inflation Prices in the eurozone are falling for the first time in more than five years, strengthening the case for the European Central Bank to unveil a full-scale package of government bond purchases later this month, despite Germany’s disapproval. The collapse in the cost of oil dragged eurozone consumer prices down 0.2 per cent in the year to December 2014, Eurostat, the commission’s statistics bureau, said on Wednesday. The figure was slightly worse than the 0.1 per cent decline that economists had expected. More On this story On this topic IN Europe The last time the currency area was in deflation was October 2009. Prices are expected to drop again in January as more recent falls in crude lower the cost of consumer goods. The latest fall, from a 0.3 per cent increase in November, will bolster calls for more aggressive action from the ECB, where top officials […]

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Will Oil Continue to Fuel the Jobs Market?

ByJeffrey Sparshott The U.S. energy boom fueled jobs such as construction work on this pipeline outside Waford City, N.D. Getty Images Friday’s jobs report may offer some early hints about the impact of falling oil prices on jobs in the oil and gas industry. The U.S. energy boom has been an engine of growth through a lackluster economic recovery, creating thousands of jobs that pay above-average wages, spawning demand for a broad array of services and supporting local economic booms from North Dakota to Texas. But with oil prices dipping below $50 a barrel , exploration and production companies are slashing budgets and squeezing suppliers . Among recent examples: Houston-based Civeo Corp. , a lodging company for oilfield workers , at the end of December said it reduced U.S. payrolls by 45% from the level at the beginning of 2014 in response to falling demand, prompting its largest stakeholder […]

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Global factory growth ends 2014 on low note: PMI

LONDON (Reuters) – Global manufacturing activity expanded at its weakest pace in more than a year at the end of 2014, even though factories cut their prices at the steepest rate for nine months, a business survey showed on Friday. JPMorgan’s Global Manufacturing Purchasing Managers’ Index (PMI), produced with Markit, fell to 51.6 in December from November’s 51.8. That was its lowest reading since August 2013. Even so, it has now been above the 50 mark that separates growth from contraction for two years. However, a PMI covering output prices slid below the break-even mark, coming in at 49.3 compared with November’s 50.1. The PMI combines survey data from countries including the United States, Japan, Germany, France, Britain, China and Russia. (Reporting by Jonathan Cable ; Editing by Larry King)

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The “Unequivocally ‘Not’ Good” Reality Of Lower Oil Prices & Jobs

The drop in oil prices is certain to cause some incremental unemployment in the U.S. energy industry; the question is simply how much and what that means for the American economy as a whole. To begin the search for answer, you have to go to the wellhead and consider how many individuals work in American oilfields, as well as those workers that directly support those activities.  The answer here, courtesy of the Bureau of Labor Statistics, is 812,000 as of March 2014 (the most current data available).   That may not sound like a lot, but at average annual wages of $99,854/worker, this small group receives $81 billion in estimated annual compensation.  How bad can things get if oil prices stay low? We actually have a recent case study in the 2008 experience, the last great crash in oil prices.  The answer is a 20% headcount reduction from October 2008 […]

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Oil Prices as an Indicator of Global Economic Conditions

West Texas Intermediate sold for $105 a barrel at the start of July, but ended last week at $58. The most important factor has been surging U.S. production . But another reason oil prices have slid so much is weakness in demand for the product, which may be related to a slowdown of overall world economic growth. Here I comment on the importance of that second factor. Price of crude oil (West Texas Intermediate, dollars per barrel). Source: FRED. For example, the price of copper fell from $3.27/pound to $2.93, a 10% drop over those same six months. This of course has nothing to do with the success of people in getting more oil out of rocks in Texas. Softness in demand for commodities like copper and oil may be one indicator of new weakness in the world economy. Price of copper (NYMEX, dollars per pound). Source: Investing.com. The […]

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China to revise 2013 GDP by about 3 pct

BEIJING, Dec. 16 (Xinhua) — China’s statistics authority will revise its gross domestic product (GDP) figure for 2013 by about 3 percent after a latest national economic census. Ma Jiantang, chief of the National Bureau of Statistics (NBS), told a press conference Tuesday that the revision is made as more detailed data became available after the third economic census conducted this year. The adjustment will be around 3 percent, lower than that for the previous two censuses, Ma said, adding that the revised figures will be released on Friday. After the second census in 2009, the NBS revised up the 2008 GDP figure by 4.5 percent. Preliminary data showed that China’s GDP stood at 56.88 trillion yuan (9.3 trillion U.S. dollars) in 2013, up 7.7 percent year on year.

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Risks for the 2015 economy? Oil prices, interest rates

Felix Sotelo of Dallas filled up his vehicle Friday at Fuel City off Riverfront Boulevard near downtown, where regular unleaded gas was $1.99 per gallon as part of an anniversary promotion by the station. Gas prices have fallen nearly 27 percent to an average of $2.30 a gallon in Dallas in the last year, according to GasBuddy.com. Will 2015 be a better year for you? Probably so — if you don’t work in the energy industry. Texas has diversified its economy significantly in the last 20 years, but oil is still king. So when oil prices plunge, it has a big effect on the state’s economy. How big? Next year may answer that question. The Texas economic engine is likely to move at a slower speed next year, even as the U.S. economy picks up steam. Texans — and all Americans — face an unprecedented time of economic transition […]

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Rapid fall in oil prices may portend global recession

Rapid fall in oil prices may portend global recession thumbnail Cratering crude-oil prices may be a blessing to cash-strapped American consumers, but it’s a double-edged sword when it comes to the overall economy. The problem for the overall economy is not so much the drop in oil prices as it is the velocity at which oil prices have fallen. The plunge from a peak of just over $100 per barrel in the early summer to today’s $58 — a massive 42 percent drop in just a few short months, most of which has come in the last 90 days — could make anyone’s head spin. The rapid fall in crude prices is a telling sign to some Wall Street analysts and economists that there may be a global recession taking hold and the slowing growth is pushing oil lower. Remember, at the height of the financial crisis, crude got […]

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Cheap Natural Gas Lures Private Equity to Power Industry

The companies most bullish on U.S. power aren’t from the energy industry . They are private equity firms, and here’s why: natural gas. Firms from Panda Power Funds to Energy Investors Funds are financing about 10 gigawatts of new gas-fired plants over the next five years in the 13-state mid-Atlantic grid. That’s enough power to run New York City on all but the hottest summer days. Traditional power companies are building less than 4 gigawatts. Part of the electric grid sits atop the Marcellus shale formation in Pennsylvania , which supplies 18 percent of U.S. gas production, up from 1.8 percent in 2007. Gas from the Marcellus shale deposit is helping boost U.S. production to a record for a fourth year. Growing supplies have cut gas prices in half over the past six years, double the drop in power, leaving investors with a healthy profit margin. Gas plants will […]

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Where U.S. Factories Have the Most to Gain From Cheap Oil

ByTimothy Aeppel Steel plants use lots of petroleum-derived raw materials and are already counting big savings from this year’s rapid fall in oil prices. Getty Images Anyone who drives a car or truck that isn’t a plug-in electric benefits from cheaper oil every time they pull up to the gas pump. But for manufacturers, the benefits are far more unevenly distributed. Consider tiremakers and steel plants . Both use lots of petroleum-derived raw materials and are already counting big savings from this year’s rapid fall in oil prices. U.S. oil prices continued to swoon on Thursday, nearing $60 a barrel for the first time in five years. The slide is driven by a glut of supply that’s expected to endure well into next year. Cheaper oil is usually good for the economy —and for domestic manufacturers. But not everyone gets the same boost and some are outright burned when […]

Posted On : Published By : Tom Whipple