Obvious signs of business and trade slow down
In Asia, as we have reported before, China leads the pack with slowing data on industrial production, imports and now there are also negative figures arriving from Thailand and Singapore, but also Europe is hampering company’s profits and sales
Thai imports were down 7.7 % in September from a year earlier and exports at first glance grew, but excluding gold and jewellery exports a decrease of 4.3 % has to be witnessed. The central bank acted and did cut interest rates, the same took place in the Philippines
Singapore’s industrial production in September fell 2.5 % as to compare a year earlier and thus also disappointing since observers expected a 1.9 % rise.
South Asia is more struck by the precarious state of global trade than other Asian regions.
On the other hand North Asia shows improving export figures, namely in Taiwan and South Korea thanks to a ramp-up in production of smart phones and tablets.
In the U.S. we note that domestic sales seem to grow thanks to the traditional Holiday Season (Christmas), also the housing market and consumer confidence are recovering. The reverse side of the medal is the fact, that China’s economy has slowed down and is more and more affecting growth and margins of American companies, the same goes for European companies. American Companies operating in Europe report this region as the weakest link in the global economic chain. Also the Middle East markets are less performing and this is all adding-up to report lower turnover, margins and a holding back of planned investment.
DuPont is an example of the situation. The diversified industrial group reports that its third-quarter earnings fell 98 % from the record set in 2011 as demand for its fast growing titanium dioxide and photovoltaic cell units declined, countered by the continued strength of agribusiness sales. Income for the quarter dropped from USD 452 million to just USD 10 million. The DuPont announcement sent shares of other chemical producers down sharply. The company expects further substantial downward trends in the fourth quarter. DuPont trims capital expenditure and launched a restructuring plan (a charge of USD 152 has been made as well as a USD242 million impairment charge related to asset groupings within the electronics and communications as well as performance-materials segments) aimed at generating pre-tax cost savings in the order of USD 450 million and by eliminating 1500 (of 70000) positions in the next 12 to 18 months.
On average, Europe accounts for about 20 % to 25 % of sales for big American companies. In addition to this negative fact for the further development, American firms had to face that the USD has improved by 7.4 % against the EUR in the past three months, making American goods more expensive and it reduces additionally the USD value of European sales.
Another company that was hit by weakening sales in Western and Central Europe is Kimberly-Clark. It decided to exit the diaper business in most of Western (except Italy) and Central Europe and plans to cut 1500 jobs and making more use of resources to markets like China, Brazil and Russia.
Also France and Belgium report that the confidence among industrialists is quickly falling and order books are growing thinner. In France the confidence index fell in October to 85 points from 90 points in September and in Belgium the manufacturers’ confidence index by the Belgian National Bank fell from -15.6 from – 13.7 points and capacity use in the sector fell from 77.3 % in July to 75.9 % in October.