Has World Trade Been Picking Up?

Yes, according to Businessweek.

Chart from Panjiva

This from Businessweek's Joe Weber,

``In yet another sign that some key players are acting as if recession is on the run, more offshore manufacturers are shipping goods into the consumer-driven U.S. market, global-trade tracker Panjiva reports. The May trade data mark the third consecutive monthly rise in the number of shippers moving such goods, the first such Trifecta since the firm began following this metric in July 2007.

``“Increasingly, it feels that the worst is behind us,” says Josh Green, chief executive officer of the trade-tracking firm. Waxing cautious, however, he adds “Still, we have a long way to get back to the pre-crisis level of global trade.”

``Nonetheless, the data, released June 16, suggest that global trade has hit bottom and is taking the first steps toward recovery. Some 131,688 suppliers were active in May, up 2% from the number in April. The rises in shipper tallies give the Panjiva analysts heart, since such totals have been sliding since at least July 2007, when they counted 161,905 shippers moving goods into the U.S.

``The analysts point to other barometers of improvement, too. The percentage of significant manufacturers on a watch list – those in danger of going out of business – dropped a percentage point to 30% in May, for instance. This marked the first such decline since Panjiva started tracking this metric last September."

Read the rest here. (Hat tip: Mark Perry)

The recent rise in the Baltic Dry Index, commodities (CRB) and oil could be partly be due to this.

Nevertheless, our take has been that the collapse in global trade was mainly a consequence of the seizure "shock" in the US banking system which virtually shackled global trade flows by constricting access to financing.

Although the paradigm which underpinned the past boom won't be revived, present signs of recovery could have been due to the replenishment of inventory destocking.

As for how sustainable this would be remains to be seen.

2008 Global Meltdown: From Financial Markets To The Real Economy

The OECD recently published its global composite leading indicators (CLI) for major OECD nations and non OECD nations.

Below is the graphical depiction of the CLIs signifying the synchronized economic collapse in 2008....(charts from OECD)

Of course, all these economic indicators matches the actions in the financial markets…

Global equities (DJW), the Baltic Index (BDI) a barometer of global shipping rates and commodity prices (CRB) almost simultaneously a swan dive…

As the US dollar managed to surge…

The chronology of the above events from our perspective:

1. Building pressures of a financial collapse eventually found a release valve despite policies thrown to avert these.

2. The ensuing global financial markets meltdown led to a seizure in operations of the global banking sector.

3. The financial paralysis, which summed to shortage of available and accessible US dollars as the liquidation process snowballed, spurred the skyrocketing of the US dollar’s exchange value.

4. Lacking access to credit, Trade finance froze!

5. The banking sector’s inaccessibility and dearth of liquidity compounded crumbling assets led to the abrupt curtailment of orders across producers.

6. Reeling from the aftershocks of the seizure of the global banking sector, the real economy suffered from a spillover.