An interesting contrast is shaping up in global trade, where some indicators of the movement of raw materials are crashing even as exports from China and air traffic continue to show outstanding strength.
Depending on your reading of the data you could decide that the threat of a double-dip recession is overblown or, perhaps more simply, not a threat but a promise.
First, the good news, at least if you are exposed to Chinese exporters. China said last week that export sales rose a stunning 43.9 percent in June from the year before, taking the trade surplus to $20 billion, its highest in eight months.
Exports to the European Union and the U.S. both rose by 40 percent in the month, somewhat confounding concerns about Europe's woes and the ongoing effects of a weak and jobless recovery in America.
Exports to faster-growing emerging markets were even stronger: up 84 percent to Russia and 59 percent to India.
You have to think that knowledge of how strong these numbers would be contributed to China's decision to make a much ballyhooed move to end the peg of its yuan to the U.S. dollar. Even so, and putting aside the ways in which these numbers argue for increased trade tensions, it seems likely that either China is kicking the stuffing out of its competitors or there is, or was, some pretty good final demand, somewhere, at some point.
Adding to this is very strong data released in late June from the International Air Transport Association, which showed a 34 percent jump in freight demand and an 11.7 percent rise in passenger traffic in May as compared to the year before.
That means both passenger and freight air traffic is now higher than it was before the financial crisis hit. Capacity utilization, another indicator of demand, is now at a record for cargo planes.
Elsewhere there are plenty of indicators that suggest that China's June numbers reflect demand that perhaps was strong three or four months ago, but looks to be cooling as the year wears on.
For one thing, if viewed on a seasonally adjusted basis the rise in exports was not as strong as earlier in the year. This may reflect the dwindling effects of an inventory restocking in the U.S. and Europe.
Who is the Stuffee?
It is also worth noting that the Baltic Dry Index has more than halved since late May. The Baltic Dry, an indicator of shipping rates, is famously difficult to interpret, as it can be both a good leading indicator of the shipment of the kinds of raw materials that are in demand as economic growth is rising, but it can also be driven by ships coming on or off the market. Because ships are slow, cumbersome and take a long time to build, shipping rates can dive or skyrocket on rather small mismatches in supply and demand.
Still, taken together with a fall in commodity prices, the shipping news seems to be telling us something about the economy as well as, possibly, about shipping. The Thomson Reuters/Jefferies CRB index of 19 raw materials is down more than 10 percent so far this year and the "capesize" part of the index, which measures shipping rates for the largest ships used to transport things like iron ore and coal, is down more than 60 percent.
"Ongoing falls in the Baltic Dry Index into July suggest Chinese hard commodity demand, for iron ore and coal in particular, should continue to weaken this month. By contrast, we are yet to see a material slowdown in Chinese crude oil imports, with import volumes 50 percent above their pre-crisis levels. Copper imports have also maintained their rate of growth and stand 100 percent above pre-crisis levels. Given the global export environment, and Chinese growth developments, it is difficult to see how this pace of demand growth can be sustained," according to Melissa Kidd, an analyst at Lombard Street Research.
It may just be that the shipping market is telling us where the air freight and export market will be in several months time. The air freight industry is tilted towards higher-valued finished goods, while
