IFF Newsletter | US Home Prices Slow Further in Oct.

TIME：2025-01-03

From the Editor

The purchasing managers' index (PMI) for the manufacturing sector stood at 50.1 in December, exceeding the boom-bust line of 50 for a third consecutive month, despite a 0.2 - point drop from the previous month, as the effects of the government's economic stimulus package continue to work through, according to the data released by the National Bureau of Statistics (NBS) on December 31.

U.S. home price growth continued to slow in October, with nationwide prices growing 3.6% year on year, down from 3.9% in September, marking the seventh consecutive month of declining annual gains, according to the latest S&P CoreLogic Case-Shiller Index data released on December 31.

Newsletter

China News

China’s Factory Activity Expands for Third Month in December

The purchasing managers' index (PMI) for the manufacturing sector was 50.1 in December, down from 50.3 in November but exceeding the boom-bust line of 50 for a third consecutive month, the National Bureau of Statistics (NBS) said on December 31.

NBS statistician Zhao Qinghe said the steady expansion of the PMI suggested that the combination of macroeconomic policies continued to take effect during the month and China's economic prosperity level continued to rebound and improve.

The data also showed that the non-manufacturing PMI came in at 52.2 in December, up from 50 in November, while the composite PMI rose to 52.2 from a month ago, indicating accelerated expansion in production and business activities of Chinese enterprises.

China's State Planner Sets Up New Low-Altitude Economy Department

The National Development and Reform Commission has established a new department to coordinate and advance the development of the low-altitude economy, according to a new column added to the website of the China's top state planner on December 27.

The Low-Altitude Economy Development Department will focus on formulating and implementing low-attitude economic development strategies, medium- and long-term development plans, making policy suggestions, and coordinating major issues.

The department has held two symposiums to address building low-altitude smart networking systems and infrastructure development, the website showed.

China Adjusts Tariffs for 2025 to Lift Imports of High-Quality Goods

China has adjusted its import tariffs for next year to promote the import of high-quality products, support technological innovation, and expand its global trade network, the Customs Tariff Commission of the State Council said on December 28, citing the government’s annual tariff adjustment plan.

Provisional import tariffs -- which are lower than the most-favored-nation rates -- will be put on 935 items from Jan. 1, according to the annual adjustment plan.

The changes aim to encourage imports of related goods, enhance domestic competitiveness, foster technological progress, ensure economic stability, and improve people's livelihoods. For example, the MFN tariff rate on packaged infant formula is 15 percent, while the provisional tariff is 5 percent.

China will introduce specified tariffs on products such as pure electric passenger vehicles, canned king oyster mushrooms, spodumene, and ethane to serve industrial development and technological advancement.After the changes, the total number of goods subject to import tariffs will be 8,960.

China's Industrial Profits Shrink Less in November as Revenue Growth Returns

Chinese industrial enterprises with annual revenue exceeding CNY20 million (USD2.7 million) earned CNY799.4 billion (USD109.5 billion) in total profits, down 7.3 percent from a year ago, according to data released by the National Bureau of Statistics on December 27. This marks an improvement from October's 10 percent decline and September's 27.1 percent plunge.

Revenue rose 0.5 percent year-on-year to CNY12.5 trillion (USD1.7 trillion), reversing October's 0.2 percent decline.

For the first 11 months of this year, industrial enterprises' profits totaled CNY6.7 trillion (USD917.9 billion), down 4.7 percent year-on-year, while revenue increased 1.8 percent to CNY123.5 trillion (USD16.9 billion).

China's Int'l Trade in Goods, Services up 3 pct in November

China's international trade in goods and services reached 4.28 trillion yuan (USD596.6 billion) in November, up 3 percent year on year, according to data released by the State Administration of Foreign Exchange on December 27.

Of the total, goods trade posted a surplus of 584.6 billion yuan, with exports at 2.15 trillion yuan and imports at 1.57 trillion yuan. Services trade recorded a deficit of 89.5 billion yuan, as exports reached 236.2 billion yuan against imports of 325.8 billion yuan.

In U.S. dollar terms, the country's total exports and imports of goods and services stood at 332.8 billion dollars and 263.8 billion dollars respectively, resulting in a surplus of 69 billion dollars.

World Bank Lifts China GDP Growth Forecast for 2024, 2025

The World Bank has raised its forecasts for China's economic growth this year and next in a report published on December 26, citing the effects of recent policy easing and near-term export resilience.

The bank now projects China's gross domestic product to expand by 4.9 percent in 2024 and 4.5 percent in 2025, up 0.1 percentage point and 0.4 point from its predictions made in June.

The Chinese government has brought out incremental stimulus measures to address slowing domestic demand, the Washington-based international lender noted.

The key measures included a CNY300 billion (USD41.1 billion) program for consumer goods trade-ins and equipment upgrades to boost consumption and investment, as well as a CNY10 trillion (USD1.4 trillion) debt swap program to refinance local government off-budget debt with lower-cost on-budget alternatives over five years.

Newsletter

International News

US Home Prices See Further Growth Slowdown in October

U.S. home price growth continued to slow in October, with the latest S&P CoreLogic Case-Shiller Index data released on December 31 showing nationwide prices grew 3.6% year on year, down from 3.9% in September, marking the seventh straight month of declining annual gains.

Although price growth is slowing, the national index hit another all-time high in October, reflecting home prices that remain at their highest ever, after accounting for seasonal fluctuations.

Mortgage rates have remained a major speed bump for demand, after rates remained near 7% for much of the year. Overall affordability is also a persistent concern, with the typical home payment now eating up a bigger chunk of the median paycheck than in the past 40 years.

Spanish Inflation Accelerates, Backing Gradual ECB Rate Cuts

Spanish inflation quickened more than anticipated this month, staying above 2 percent for a second month on base effects and supporting the case for the European Central Bank's gradual interest-rate cuts. according to national statistics agency data published on December 30.

Consumer prices advanced 2.8 percent from a year ago in December, stronger than the 2.4 percent in November, according to the data published by Spanish statistics agency INE.

European Central Bank (ECB) President Christine Lagarde said this month that while inflation across the euro area is set to fluctuate around its current level in the near term, the spike of recent years is increasingly moving into the rear-view mirror.

Canadian Ministers' Florida Meeting Yields No Progress on Trump's Tariff Threat

Canadian Finance Minister Dominic LeBlanc and Foreign Affairs Minister Mélanie Joly met with U.S. President-elect Donald Trump's team in Florida's Palm Beach area on December 27, but failed to secure assurances that Trump would back away from threatened tariffs on all Canadian products.

A statement from LeBlanc's office said the visit is to underscore "Canada's efforts to combat fentanyl trafficking and illegal migration and the measures outlined in Canada's Border Plan."

The Canadian federal government announced the plan to bolster border security and strengthen the immigration system in response to Trump's threat to impose a 25-percent tariff on all Canadian imports unless Canada stops illegal immigration and the smuggling of the opioid fentanyl into U.S. territory. Ottawa earmarked 1.3 billion Canadian dollars (907 million U.S. dollars) over six years to strengthen U.S.-Canada border security.

A senior Canadian official, however, said the Americans remain preoccupied on the U.S. trade deficit with Canada and want it to shrink.

Singapore's Economy Grows 4 Pct in 2024, Surpassing Expectations

Singaporean Prime Minister Lawrence Wong announced on December 31 that the country's economy grew by 4.0 percent in 2024, "exceeding expectations."

"With the strong economy, I expect real incomes to rise further," Wong said in his New Year message.

The prime minister said he would set out the country's next steps in Budget 2025 to be unveiled on Feb. 18. Key priorities include enhancing Singapore's economic competitiveness, creating opportunities and good jobs for citizens, and mitigating the impact of rising living costs.

Japan's November Unemployment Rate Holds Steady at 2.5%

Japan's unemployment rate remained unchanged at 2.5 percent in November from the previous month, government data released on December 27 showed .

The total number of people with jobs rose 0.1 percent to a seasonally adjusted 68.08 million while those without jobs climbed 0.6 percent to 1.72 million, according to the Ministry of Internal Affairs and Communications.

Of those not in work, the number of people who voluntarily left their jobs increased 5.7 percent to 740,000 while those who were seeking new jobs fell 6.4 percent to 440,000.

Meanwhile, separate government data showed that job availability ratio was also unchanged from October at 1.25 in November, meaning there were 125 jobs available for every 100 job seekers.

Job openings were on the rise due to labor shortages, but an increasing number of people were searching for better-paying jobs as they endeavor to offset higher inflation, the Ministry of Health, Labor and Welfare said.

Japan Gov't Approves Record 115.54 Trillion Yen Draft Budget For Fiscal 2025

The Japanese government on December 27 approved a record 115.54 trillion yen (about 733 billion U.S. dollars) draft budget for fiscal 2025 as expenditures for social security and national defense continue to rise.

The general-account budget for the year starting next April exceeded the 110 trillion yen-mark for the third consecutive year and surpassed the previous record of 114.38 trillion yen set in fiscal 2023.

Prime Minister Shigeru Ishiba's cabinet approved the bill on the day. The draft will be submitted to the Diet, or parliament, for deliberations during its regular session beginning next month.

A record 38.28 trillion yen, or about a third of the budget, is earmarked to cover social security costs that have been swelling with an aging population and a declining birthrate.