Overseas Headlines – April 12, 2017


U.S. import prices post largest drop in seven months in March
U.S. import prices recorded their biggest drop in seven months in March as the cost of petroleum declined, but the underlying trend pointed to a moderate rise in imported inflation as the dollar’s rally fades. The Labor Department said on Wednesday import prices fell 0.2 percent last month, the largest drop since August, after a 0.4 percent increase in February. That lowered the year-on-year increase in import prices to 4.2 percent from 4.8 percent in February. Economists polled by Reuters had forecast import prices slipping 0.2 percent last month. U.S. financial markets were little moved by the report. The drop in import prices is unlikely to be sustained with oil prices pushing higher in recent days amid rising geopolitical tensions following last week’s U.S. missile strike on Syria and reports that Saudi Arabia wants to extend production cuts enacted in January for another six months.


German economy gained momentum at start of 2017 – economy ministry
The German economy, Europe’s largest, picked up speed at the beginning of this year, lifted by a robust industrial sector and rising employment that is supporting private consumption, the Economy Ministry said on Wednesday. "The German economy’s rate of expansion accelerated somewhat in the first quarter," the ministry said in a statement. In the final three months of 2016, the economy grew by 0.4 percent.


China Producer Price Reflation Moderates as Commodities Cool Off
China’s producer prices surged again at close to the quickest pace since 2008 last month, though pulled back slightly from February, suggesting the reflationary boon to industrial profits is set to moderate.

Key Points

· Producer price index rose 7.6 percent from a year earlier, versus median estimate of 7.5 percent in Bloomberg survey and 7.8 percent increase in February
· Consumer price index rose 0.9 percent in March, versus 0.8 percent gain in February, the National Bureau of Statistics said Wednesday

Big Picture

The revival in China’s producer prices — driven in part by higher commodity prices and a pickup in industrial activity — has helped fuel the world’s shift away from deflationary pressures. The rebound aided company profits while providing the government respite to rein in borrowing, tighten monetary policy, and cool a frenzy of speculation in the housing market. PPI gains are forecast to moderate in coming quarters as low year-earlier figures fall away.