Plus: World Trade to Climb, Payrolls See Best Gain in Three Years and Air Cargo Rebounds.

World Trade Expected to Rise in 2010
Following one of the most severe economic declines in decades, global trade is expected to rebound significantly in 2010, though it will still be more than a year before trade volumes reach 2008 levels.

After a 12.2 percent decline in 2009, global trade is set to grow by 9.5 percent in 2010, according to the World Trade Organization (WTO) in March. Industrialized nations, which experienced more severe export declines than the rest of the world in 2009, are forecast to have 7.5 percent trade growth this year, while developing nations are expected to see an average trade growth of 11 percent.

The WTO attributes last year’s trade losses to “a sharp contraction in global demand … magnified by the product composition of the fall in demand, by the presence of global supply chains and by the fact that the decline in trade was synchronized across countries and regions.”

Amid the turmoil, China surpassed Germany as the top exporter of goods, accounting for nearly 10 percent of exports, while the United States remained the world’s largest importer, bringing in 13 percent of the world’s imports.

In attempts to correct its trade imbalance, the U.S. is exploring plans to double the country’s exports within the next five years, reevaluating tariff policies and pressuring China to remove currency-control measures, the New York Times reports.

Some experts, however, claim that last year’s trade declines and this year’s projected gains are not as significant as they seem.

“[A]s much as two-thirds of the value of goods that go into trade statistics represent intermediate parts, which are imported from other countries and used to make finished products that then get re-exported. Economists call this the ‘valued-added effect,’” the Wall Street Journal explains. “If the value of imported parts were stripped out, however, global trade would have declined by between 4 percent and around 8 percent last year, economists say.”

Payrolls See Best Gain in Three Years
American employers added 162,000 jobs in March, the largest rise in three years, the U.S. Department of Labor reported on Friday. Non-farm payrolls rose for just the third time in the past 27 months, aided by the hiring of 48,000 temporary workers to conduct the 2010 Census survey. Excluding the Census workers, payrolls rose by 114,000.

“Payroll gains were broad based, with 60 percent of all industries adding workers in March,” MarketWatch reports. “Goods-producing industries’ payrolls rose by 41,000, the first increase since March 2007. Manufacturing payrolls increased by 17,000, with 58.5 percent of manufacturing industries hiring.

“Construction employment rose by 15,000, likely a rebound from unseasonably bad weather in February,” MarketWatch continues. “Service-producing industries added 121,000, including 39,000 in government.”

“With close to one in 10 American workers out of work,” the monthly job count was considered “a key sign of the health of the economic recovery,” Agence France-Presse notes.

Despite the number of jobs created, it wasn’t enough to budge the unemployment rate. “In March, the number of unemployed persons was little changed at 15 million, and the unemployment rate remained at 9.7 percent,” according to the Labor Department.

The March report “doesn’t tell you much about sustainability,” Steven Ricchiuto, chief economist for Mizuho Securities USA, told MarketWatch.

However, Jeffrey Kleintop, chief market strategist at LPL Financial in Boston, told the Associated Press, “Just getting a number with six digits — over 100,000 — is, I think, very much encouraging to a lot of folks who really believe that none of this counts until we start creating jobs.”

“The economy needs to add more than 100,000 jobs a month just to absorb new entrants into the labor market, let alone provide a livelihood for the 15 million Americans already looking for work,” the New York Times said. “Without constant, robust growth, the unemployment rate won’t budge. Indeed, the Congressional Budget Office has projected that the rate will hover around 10 percent for the rest of the year.”

Obama to Open Offshore Areas to Oil Drilling
The Obama administration last week announced a proposal to open vast expanses of water along the Atlantic coastline, the eastern Gulf of Mexico and the north coast of Alaska to oil and natural gas drilling for the first time.

“The proposal — a compromise that will please oil companies and domestic drilling advocates but anger some residents of affected states and many environmental organizations — would end a longstanding moratorium on oil exploration along the East Coast from the northern tip of Delaware to the central coast of Florida, covering 167 million acres of ocean,” the New York Times reports.

“I want to emphasize that this announcement is part of a broader strategy that will move us from an economy that runs on fossil fuels and foreign oil to one that relies on homegrown fuels and clean energy. And the only way this transition will succeed is if it strengthens our economy in the short term and the long term,” President Obama said.

“The bottom line is this,” Obama said: “Given our energy needs, in order to sustain economic growth and produce jobs, and keep our businesses competitive, we are going to need to harness traditional sources of fuel even as we ramp up production of new sources of renewable, homegrown energy.”

“The administration’s plan generally covers the period from 2012 to 2017, but it also modifies an existing five-year plan that expires in 2012,” the Wall Street Journal said (subscription required). To open up the eastern Gulf, the president needs to get Congress’s permission. It will take several months to begin studying how much oil exists off the Atlantic coast.

The Times adds that while Obama “has staked out middle ground on other environmental matters — supporting nuclear power, for example — the sheer breadth of the offshore drilling decision will take some of his supporters aback.”

Reactions have been mixed. Some have applauded the decision as a job creator and a way to ease the country’s reliance on foreign oil, while others fear environmental risks from drilling and potential spills. Still others claim the president’s proposal is a step in the right direction but doesn’t go far enough.

Air Traffic Expanding
New data indicate that demand for air traffic is rising, strengthening the economic recovery for the air transportation industry. However, progress is likely to remain gradual and financial risks will continue to pose a challenge.

Demand for scheduled air traffic in February 2010 was up 9.5 percent for passengers and 26.5 percent for air cargo over the same month last year, the International Air Transport Association (IATA) said last week. While these numbers indicate healthier demand, the organization noted that late 2008/early 2009 marked the bottom of the recessionary demand cycle in air transport, meaning passenger demand must increase by an additional 1.4 percent and cargo traffic by 3 percent to reach pre-downturn levels.

“We are moving in the right direction. In two to three months, the industry should be back to pre-recession traffic levels. This is still not a full recovery. The task ahead is to adjust to two years of lost growth,” Giovanni Bisignani, IATA’s director general and CEO, said.

Last month, North American airlines posted 4.4 percent year-over-year passenger growth and 34.1 percent growth in cargo, while European airlines saw 4.3 percent passenger growth and a 7.2 percent cargo increase. Asia-Pacific air carriers had 13.5 percent passenger increases and 34.5 percent cargo growth, while Latin American firms had passenger traffic rise by 8.5 percent and cargo by 41.9 percent.

“The global strong air freight upturn has been largely driven by the business inventory cycle,” according to the IATA. “We can expect this part of the cycle to wear-out in the second half of the year when inventories reach normal levels. From that point, we can expect slower growth as air freight will be driven by consumer spending and world trade growth.”