Beware the ides of China. While everyone is off sharpening their knives in Canberra, China’s economy seems to be sending rather alarming messages to the rest of the world about its declining health. And as our biggest export market, you’d reckon there would be some recognition of the message in the government. The Reserve Bank will certainly notice, but what about federal Treasury and the chief cigar-puffer Joe Hockey?

China’s January trade figures, released yesterday, were stunning — an unexplained, almost 20% slide in imports, and exports down 3.3%, and a record US$60 billion trade surplus as a result. The fall in imports was far greater than any forecast by analysts before the release of the data and the sharpest since May 2009, when Chinese factories were still trying to survive the impact of the GFC. Looking at the data, ANZ said most of the slump in imports was the result of falling commodity prices, especially coal and oil — China’s iron ore imports and crude oil imports fell by 9.4% and 0.6%, respectively, by volume. However, in value terms, iron ore imports dropped by 50.3% and crude oil imports slumped 41.8%. That saw the value of imports from Australia and the Russia fall by 35.3% and 28.7%, respectively.

For Australia, the falls, especially in iron ore, look alarming — China’s iron ore imports fell to 78.57 million tonnes from the record December high of 86.85 million tonnes, and 86.83 million in January 2014 (one of the few times in recent years that there has been a fall year on year). But data from Port Hedland shows no change in iron ore exports to China in January (just over $30 million tonnes) compared to the last quarter of 2014. So China appears to have cut imports from Brazil. Coal imports dropped nearly 40% to 16.78 million tonnes, from December’s 27.22 million tonnes. The data confirms the Chinese economy isn’t growing strongly, unlike the US. — Glenn Dyer

America’s jobs boom continues. I know events political are consuming folk in Canberra and the conga line of debt-and-deficit warriors in the media, business and the commentariat, but if they care to take a break and look at their smartphones or tablets or laptops, they might find that heavily indebted, high-deficit America is in the midst of a jobs boom the likes of which the economy hasn’t seen since 1997 — when Bill Clinton ruled the roost.

In fact, if the Tea Party clowns and their fellow travellers in the US, the UK and in Australia pause for a moment to read the US jobs report from last Friday they might be astonished to learn job creation is now at its strongest in the US since 1997, while debt and deficits remain high (oh, shock, horror!). There were 257,000 new jobs reported in January, plus 244,000 extra jobs found in December (72,000) and November (172,000), with the unemployment rate falling to 5.7% as more people flooded back into the growing work force looking for jobs. US wages also improved markedly in January after the weakness in December and for much of 2014 — they are now running at just over 2%, or twice the rate of consumer inflation (and underlying inflation). At 423,000, November’s new jobs figure was the largest for any month since May 2010, when employment was boosted by government hiring for the national census. Over the past three months, more than one million jobs have been created, the first time that milestone has been reached since late 1997.

Now the debt-and-deficit folk tell us that debt and deficits need to be cut before the economy can boom. Yes, there have been spending cuts in the US that have helped curb the growth in the deficit, but the big reason for the fall is rising job numbers and corporate profits.

And for those who see a productivity crisis in every nook and cranny in the Australian economy: take a look at what happened in America. The first estimate for productivity in the December quarter showed an annual fall of 1.8%, and a rate for 2014 as a whole of 0.8%. “Shock horror!” I hear the productivity trolls exclaim! “The Americans will have to lift their game.” But is it as bad? Productivity is notorious for being a statistic that is constantly revised, and there are two telling figures that help explain the outcome. The hundreds of thousands of jobs added in the quarter, and the number of hours worked rose 5.1%, which was much stronger than the 2.6% rise in GDP (in the first estimate). High and rapid levels of employment always depress productivity until there’s a slowing and the balance between inputs and outputs start settling. In fact, the weak productivity is confirmation of the strength of the US economic recovery. — Glenn Dyer

Rates to rise because American growth is expanding. As a result of the accelerating jobs growth, America’s first interest rate rise in more than six years will stand out in coming months. According to most US analysts, you can bet your house on that happening. And as we struggle here to get the message of what last week’s interest rate cut meant (the economy is not doing well), the looming rate rise means the US economy has finally broken free of past constraints to do what it does as the fastest and best of all the world’s economies — create jobs, very, very quickly. And there’s one more factor: consumer and business confidence is running strong — at 11-year highs according to some measures, and another out this week. That’s very different when Tony Abbott and Joe Hockey’s budget flattened confidence last May, which hasn’t moved apart from an uptick in September-October. That’s why it will take a change of leadership, treasurer and possibly another rate cut to force a pick up. — Glenn Dyer

Watch the Australian sharemarket. And to think there was mass cheering for the rate cut last week in Australia from the RBA! It was cheering for all the wrong reasons, as the solid US growth and jobs boom show, growth is good, especially when everyone is sick of talking about stagnation or deflation. We cut because the economy is sliding and slowing on the downside, not on the upside. That makes the sharemarket surge here a little hard to understand. Today, the Australian market will attempt a record 13 consecutive days of rises — our market has been performing better than the US in the past couple of weeks. Looking for explanations, here’s one not considered by the analysts — Tony Abbott’s leadership woes. Abbott managed to hold on and defeat this morning’s spill motion, but will the market go on rising, or fall into a funk? — Glenn Dyer

Peter Fray

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