Rebound in Trade Hints at Stability in China Economy

HONG KONG — China’s trade rebounded in July in a possible sign that its economy is stabilizing after a slowdown over the last year.

The improvement offers small but encouraging hope for China’s leaders, who are struggling to arrest a downturn that dragged growth to a two-decade low in the latest quarter.

China’s exports rose 5.1 percent in July from a year earlier and imports were up 10.9 percent, according to customs data. China is the world’s second-largest economy, after the United States.

Economists had expected trade to grow after it shrank in June, but the rate of growth surpassed expectations.

China’s politically delicate global trade surplus narrowed to $17.8 billion.

Economists said the surge in imports suggested that domestic demand was holding up, a major goal for China’s policy makers, who are trying to reduce the economy’s dependence on trade and investment in favor of more self-sustaining domestic consumption.

Imports of iron ore, an important commodity used to make steel, surged 24 percent by volume, while copper imports grew 12 percent. Both figures were the fastest rates in more than a year, said Yao Wei, China economist at Société Générale.

She said the return to growth was a sign of “some stabilization in external demand, at best — not yet a solid recovery.”

Analysts said the figures were a sign of improvement but cautioned about reading too much into a single set of numbers.

“July seems to reflect a return to a normal, relatively uninspiring trend after a weak June, rather than the beginning of acceleration in growth,” said Alistair Chan, an economist at Moody’s Analytics. “While the worst seems to be over, the upturn will be relatively flat.”

Chinese leaders are facing pressure to meet a goal of 7.5 percent growth for the year, which is far stronger than the forecasts for the United States, Europe and Japan, but would be the country’s weakest performance since 1991.

Exports to the United States, China’s biggest foreign market, edged up 2.3 percent, leaving a trade surplus of $19.1 billion. Exports to the 27-nation European Union shrank 2.8 percent, for a trade gap of $10 billion.

Rising Price Index Hints at Rebound in Japan

TOKYO — Japanese consumer prices rose in June at their highest annual pace in nearly five years in an early sign of an end to persistent deflation, boding well for the central bank’s bold stimulus plan to achieve its 2 percent inflation target in two years.

The 0.4 percent rise in core consumer prices, which is slightly higher than a median market forecast for a 0.3 percent increase, was largely because of a rise in electricity bills and a weak yen that inflated the cost of gasoline imports.

But it is an encouraging sign for the Bank of Japan, eager to end 15 years of grinding deflation, because it suggests that more companies are optimistic enough about the economy to believe they can raise prices or at least not cut them.

The data is also a boost to Prime Minister Shinzo Abe’s sweeping pro-growth policies that aim to pull the world’s third largest economy out of stagnation.

Mr. Abe’s government, which is driving an aggressive policy mix of monetary and fiscal stimulus to foster sustainable long-term growth, has already seen positive signs as first-quarter data showed Japan was the fastest-growing major economy in the world.

The increase in the core consumer price index, which excludes fresh food but includes energy costs, was the highest annual pace since a 1 percent rise in November 2008. It is the first time in 14 months that consumer prices have risen. (In May, prices neither rose nor fell.)

Tokyo core C.P.I., a leading indicator of nationwide prices, rose 0.3 percent in July after a 0.2 percent increase in June, matching the median forecast, suggesting prices will continue to rise in the coming months.

The Bank of Japan unleashed an intense burst of monetary stimulus on April 4, promising to double the supply of money through aggressive asset purchases to meet its 2 percent inflation target in roughly two years.

Many analysts expect prices to gradually rise, reflecting improvements in the economy, but they view the two-year time frame for achieving the inflation goal as too ambitious.

Off the Charts: Hints of a Corner Finally Turned in Ireland

That news hardly indicates that Ireland has come out of its long downturn, one that was brought on by a property boom backed by irresponsible lending. But the upturn in real estate prices nonetheless provided a note of cheer this week in a country whose consumers were already more optimistic — or at least less pessimistic — than they had been in years.

The Central Statistics Office reported that prices of residences in Ireland — homes and apartments — were 1.2 percent higher in June than they had been a year earlier. As can be seen from the accompanying charts, it was the first time since January 2008 that home prices rose over a 12-month period.

The recovery, such as it is, is concentrated in the Dublin region, where it appears that the huge backlog of overbuilding has finally been worked off. That is not true in some other parts of the country, where prices continue to decline.

And even with the latest increase, the index of residential prices is 50 percent below the peak level, and mortgage delinquencies continue to rise. Prices of apartments have fallen further than house prices, declining 60 percent from the peak, compared with a 48 percent decline for houses.

Before the real estate prices were reported, the KBC Ireland/ESRI Consumer Sentiment Index rose in June to the highest level since late 2007. As can be seen from the charts, which trace the two components of that index, that is largely because of an increase in the index of economic expectations, which is higher than at any time since July 2007. The index of current conditions remains in the range it has languished in for several years.

The latest increase in consumer confidence came as something of a surprise, and Austin Hughes, an analyst at KBC Bank, said it might be partly because of exceptionally good weather while the survey was being conducted. “It remains the case that Irish consumers are cautious and the improvement in sentiment is still fragile,” he said, “but the June sentiment reading is consistent with the view that the Irish economy is edging forward rather than slipping backward.” He added, “Signs of an improvement in both the jobs market and the property market of late appear to have eased consumer fears.”

The government also reported this week that 2,009 new homes were completed in the second quarter of this year, 11 more than in the same period of 2012. It was the first time since December 2006 that three-month figures showed a year-over-year gain.

But the figures still remain extremely low. For the last 12 months, 8,259 homes were finished. That is fewer than were finished in the single month of December 2006, while the property boom was at its strongest.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

Bits Blog: SoftBank Chief Hints at More Price Cuts for Sprint

Franck Robichon/European Pressphoto Agency Masayoshi Son, SoftBank’s chief executive, has been behind a sharp decline in prices for broadband and cellphone services in Japan.

Sprint’s new unlimited wireless plan, announced last week after its $21.6 billion acquisition by Japan’s SoftBank, did not deliver the aggressive price cuts that some analysts had expected.

But cheaper plans could be coming.

In a phone interview, Masayoshi Son, SoftBank’s chief executive, hinted that further price cuts could be in the works as the company invests to upgrade Sprint, America’s No. 3 wireless carrier.

“We will be aggressive in technology, price packages, services on every front,” Mr. Son said from California on Wednesday. “At the same time, we will improve the network to be the world’s best,” he said.

SoftBank, the Tokyo-based Internet and mobile communications giant, has a reputation in Japan for undercutting rivals on price to gain market share. Mr. Son has been behind a sharp decline in prices for broadband and cellphone services in Japan.

Expectations are high that Mr. Son will bring that strategy to Sprint, which has struggled with subscriber defections for years and that Mr. Son will inject healthy dose of competition to America’s mobile industry.

But Sprint’s price cuts have not been particularly groundbreaking, and executives have said the cuts were in the works before the SoftBank acquisition.

Under Sprint’s new wireless plan, customers pay $80 a month for unlimited data, texting and calling, down from the $110 Sprint had charged for a similar pricing.

“This is not the ‘magic behind the black curtain’ moment that many were waiting for with SoftBank,” Jennifer M. Fritzsche, senior analyst at Wells Fargo Securities, wrote in a research note on July 12.

Sprint remains under pressure from T-Mobile USA, the No. 4 wireless network, which has been offering a $70 package for unlimited talk, text and data from earlier this year.

Verizon, the industry leader, offers a shared data plan with unlimited talk and text messages for $90 a month, while AT&T, the No. 2 network, has a similar plan for $85.

Mr. Son has said that he planned to invest $16 billion in Sprint over the next two years to shake off competition from T-Mobile while also closing the gap with Verizon and AT&T.

Most of that investment will be spent on base stations for Sprint’s advanced LTE network, he told the Nikkei newspaper earlier this month.
And if SoftBank’s past antics in Japan are a clue, Mr. Son could also start driving down prices.