European and Japanese GDP Growth Stalls
The economic slowdown that began with the U.S. housing/mortgage crisis a year ago has spread globally. Much higher energy costs and generally rising inflation have made the situation worse. In the second quarter of 2008 GDP growth went negative or slowed in Japan and many European countries ( Chart 1 ). After many years of growth ( Chart 2 ) the Eurozone is now facing more difficult times..
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Chart 1 |
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Chart 2 |
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Inflation Relief – Oil and Metal Prices Plunge
Beginning in early August prices dropped sharply for oil ( Chart 3 ) and key metals - copper ( Chart 4 ), tin ( Chart 5 ), gold ( Chart 6 ) and silver
( Chart 7 ). Presumably weaker global demand and a strengthening U.S. dollar have driven these price declines.
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Chart 3 |
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Chart 4 |
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Chart 5 |
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Chart 6 |
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Chart 7 |
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U.S. Dollar Strenthens (Conversely Other Currencies Weaken)
Most historical currency exchange charts experienced a sharp change in direction in the last month. The trade weighted value of the U.S. dollar
( Chart 8 ) increased as the U.S. dollar grew stronger versus the Canadian dollar ( Chart 9 ), euro ( Chart 10 ), Japanese yen ( Chart 11 ), Taiwanese NT$ ( Chart 12 ) and S Korean won ( Chart 13 ). Even China’s yuan ( Chart 14 ) changed direction (perhaps only briefly) after its long period of strengthening.
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Chart 8 |
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Chart 9 |
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Chart 10 |
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Chart 11 |
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Chart 12 |
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Chart 13 |
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Chart 14 |
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China/Taiwan Seasonal REcovery – a Bit Tepid in July
We are now into the seasonal “busy season” in Southeast Asia as sellers ramp up personal computer and mobile phone inventories for the “back-to-school” and Christmas seasons.
When comparing the first half of 2008 versus the same period in 2007 ( Chart 15 ), a broad composite of 101 Taiwan-listed electronics makers (often with plants in China) reported a 14.2% revenue increase. These same companies (on a 3-month basis) grew only 13.2% in July 2008 compared to 36.7% in October 2007 ( Chart 16 ). This year’s Southeast Asian seasonal growth will likely be subdued compared to 2007.
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Chart 15 |
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Chart 16 |
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Taiwan/China-made motherboards ( Chart 17 ), passive components ( Chart 18 ), rigid printed circuit boards ( Chart 19 ) and copper clad laminate
( Chart 20 ) are showing similar “seasonal recovery” sales patterns. So are the local ODMs ( Chart 21 ). However, process equipment suppliers ( Chart 22 ) have reported recent softness.
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Chart 17 |
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Chart 18 |
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Chart 19 |
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Chart 20 |
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Chart 21 |
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Chart 22 |
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TFT display panel makers ( Chart 23 ) peaked last October and thus far have shown no sign of a “recovery.” However, the chip foundries ( Chart 24 ) not surprisingly are mirroring the upturn in global chip shipments. Package & test ( Chart 25 ) and memory chip makers (Chart 26) are also seeing their expected late summer upturn.
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Chart 23 |
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Chart 24 |
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Chart 25 |
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European Component Distributors – Demand Flattened in 2Q’08
DMASS reported flat electronic component shipments across Europe when comparing 2Q’08 versus 2Q’07 ( Chart 27 ). Germany had no growth and Italy declined but Eastern Europe enjoyed a noticeable expansion as component shipments to Russia were up +23%, the Baltic States grew 24.9% and the “Eastern European” countries consumed 11% more components ( Chart 28 ).
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Chart 27 |
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Chart 28 |
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