Global Poll Predicts U.S. Economy Rebounding

The U.S. receives its highest rating from international investors in more than two years on new optimism that the world’s largest economy will weather the financial crisis in Europe and avoid a recession in 2012, according to a Bloomberg poll.

More than two in five of those surveyed -- 41 percent -- identify the U.S. as among the markets that will perform best over the next year. That’s up from less than one in three who felt that way in September and is the biggest percentage for the U.S. since the survey began in October 2009. It’s also almost double that of the next two top-rated markets, Brazil and China, according to the quarterly Bloomberg Global Poll conducted Dec. 5-6 of 1,097 investors, analysts and traders who are Bloomberg subscribers.

The U.S. “may not be in the best shape ever, but compared to others it should outperform,” Alexis Laming, a poll respondent and associate director for Arab Bank (Switzerland) Ltd. in Geneva, says in an e-mail. It has “good growth potential for next year.”

Less than a quarter of investors say they expect the U.S. to relapse into recession within the next year, according to the poll. In September, half those surveyed forecast a U.S. economic contraction within that time frame.

U.S. respondents are more optimistic about the American market than their counterparts overseas: More than half pick it as a best-performing market for 2012 compared with a third of non-U.S. investors who do the same.
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German Industrial Output Rose in October

German industrial production rose more than economists forecast in October as factories weathered debt turmoil that hurt output in other countries across the region and threatens to push it into a recession.

Production climbed 0.8 percent from September, when it dropped 2.8 percent, the Economy Ministry in Berlin said today. Economists forecast a 0.3 percent increase, according to the median of 33 estimates in a Bloomberg News survey. Separate reports showed industrial output declined in the U.K., Italy and Norway.

Europe’s two-year-old debt crisis has damped demand for German goods, increasing the chance that the economy will contract. Still, factory orders rebounded 5.2 percent in October, the ministry said yesterday, and business confidence and hiring increased in November, suggesting domestic consumption may help Germany weather the downturn.
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U.S. Stock Futures Rise on EU Summit Optimism

U.S. stock-index futures rose, indicating the Standard & Poor’s 500 Index will climb for a third day, amid speculation European leaders will agree on measures to ease the region’s debt crisis at a summit this week.

JPMorgan Chase & Co. (JPM), the biggest U.S. lender by assets, climbed 0.5 percent in early New York trading, leading financial shares higher.

Futures on the S&P 500 expiring this month rose 0.4 percent to 1,259.9 at 7:26 a.m. in New York after earlier climbing as much as 1 percent. The S&P 500 has struggled to make any headway this year, rising less than 0.1 percent (SPX), as the euro area’s debt crisis spread to the 17-nation currency’s larger economies. Still, the gauge is the only major developed equity market of 24 tracked by Bloomberg that hasn’t fallen this year. Dow Jones Industrial Average futures also expiring in December added 48 points, or 0.4 percent, to 12,160 today.

“All is not lost for investors, especially as U.S. growth rates appear to be accelerating,” said Dan Greenhaus, the chief global strategist at BTIG LLC in New York. “The only question at this point is how deep the European recession will be and what effect it has on other regions.”

German Chancellor Angela Merkel and French President Nicolas Sarkozy will argue for rewriting European Union treaties to tighten control of national budgets at the meeting in Brussels tomorrow and on Dec. 9. U.S. Treasury Secretary Timothy F. Geithner urged the euro area’s governments to work with central banks to erect a “stronger firewall” to end the sovereign-debt crisis.
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China Sees Growing Challenges as Declining Demand Weakens Exports: Economy

China sees an increase in domestic costs and a slowdown in overseas demand putting “severe” pressure on its exports next year, a sign that policy makers may have little appetite to allow faster gains in the yuan.

Premier Wen Jiabao’s embrace of higher wages, along with a jump in land and raw-materials prices and a stronger yuan are restraining shipments, the Commerce Ministry said today. While the nation can achieve export gains as long as Europe’s crisis doesn’t deepen, it will need to focus on strengthening links with emerging markets, Wang Shouwen, head of the foreign trade department, said at a briefing in Beijing.

The yuan weakened last month by the most in more than a year, a shift that may stoke the ire of U.S. lawmakers and presidential candidates who see the Asian nation’s competitiveness as a damper on American job growth. China’s surging trade surplus since joining the World Trade Organization a decade ago has helped the country accumulate a record $3.2 trillion in foreign-exchange reserves and made it the U.S.’s largest overseas creditor.

“The room for yuan appreciation is very limited and the currency will have higher volatility,” said Dariusz Kowalczyk, a senior economist with Credit Agricole CIB in Hong Kong. “It seems China is moving to protect its exporters more aggressively, especially as the external environment deteriorates.”
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U.K. Shop-Price Inflation Slows to Lowest in Year on Supermarket Price War

U.K. shop-price inflation slowed in November to the lowest in a year as a supermarket price war curbed food-cost increases, the British Retail Consortium said.

Retail prices rose 2 percent from a year earlier, down from 2.1 percent in October, the trade group and Nielsen Co. said in an e-mailed report in London today. A separate report from KPMG LLP showed hiring for full-time jobs dropped the fastest since July 2009.

Bank of England Governor Mervyn King said last month that inflation will slow through 2012, helping to support consumers as the debt crisis in Europe undermines the outlook for growth. Policy makers will probably leave their bond-purchase facility at 275 billion pounds ($430 billion) and their key interest rate at a record low tomorrow to bolster the recovery.

“It’s been a slow start to Christmas trading and many retailers have reduced prices further in recent weeks,” Mike Watkins, senior manager of retail services at Nielsen, said in the statement. “The outlook for inflation is however much more positive than this time last year and shop-price inflation is expected to fall further in the first part of 2012.”

Food prices gained an annual 4 percent, down from 4.2 percent in October, while inflation on non-food goods remained at 0.8 percent, today’s report said. On the month, food prices were unchanged after falling 0.5 percent in October.

KPMG and the Recruitment and Employment Confederation said an index of hiring of full-time staff fell to 48.2 in November from 49.7 the previous month. A measure of demand for temporary staff dropped to 50.9 from 52. Readings below 50 indicate a contraction.

King said a press conference last month that inflation is set to slow “sharply,” and in the absence of a spike in commodity prices, “the extraordinary squeeze on real take-home pay that we’ve seen in the past three years should now begin to come to an end,” easing pressure on consumers.
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Australia’s Economy Expands More Than Forecast on Consumers, Mining Growth

Australia’s economy grew faster than estimated last quarter on consumer spending and mining-driven investment, spurring the local currency as investors pared bets on the pace of interest-rate cuts next year.

Gross domestic product rose 1 percent in the three months ended Sept. 30, after growing a revised 1.4 percent the prior quarter, the fastest pace in four years, a Bureau of Statistics report released in Sydney today said. The median of 24 estimates in a Bloomberg News survey was for 0.8 percent growth.

The data show the only Group of 10 economy to avoid a recession during the global credit crisis was well placed before Europe’s sovereign-debt crisis intensified, Citigroup Inc. economists said. Reserve Bank Governor Glenn Stevens has lowered rates at consecutive meetings for the first time since 2009, and investors today reduced odds for a 50-basis-point cut on Feb. 7.

“The result should allow RBA Board members to enjoy their Christmas-New Year break,” said Paul Brennan, a senior economist at Citigroup in Sydney. “Economic momentum finished the third quarter solidly and recent cuts in official interest rates should help safeguard sectors of the economy most exposed to short-term cyclical swings until the RBA board next meets.”

Currency Gains

The Australian dollar rose after the report, buying $1.0268 at 1:30 p.m. in Sydney from $1.0243 before the data.

Compared with a year earlier, the economy expanded 2.5 percent in the third quarter, today’s report showed. Economists forecast a 1.9 percent year-over-year gain.

Yields on interbank cash-rate futures for the next five months climbed, with the April contract gaining 8 basis points to 3.35 percent, the highest level in almost a month.