What’s the world’s most economically powerful city?
If you picked New York or Tokyo, you’d be wrong.
But when Forbes.com set out to measure the world’s most powerful cities, the lack of useful data was surprising.
For sovereign nations, it’s easy to find measures of almost every variable imaginable--gross domestic product (GDP), inflation, money flows and other metrics. After all, the United Nations, the World Bank and the International Monetary Fund all deal with governments at the national level. But for corporations, cities and their economies matter most, since picking the right city will be the key to prosperity in the future.
Corporations, and even individuals, have to weigh the size of a city’s economy compared to how it will be in the future and consider the potential growth in the intervening years. For that matter, they have to judge whether it’s worth it to settle for a city that has high growth prospects but turns out to be a lousy place to live.
To create our ranking of economic power, we looked at all of these factors to see who’s strong across the board.
While Tokyo and New York are far and away the largest economies of today and tomorrow, they are growing much slower than many. Thus it’s fast-growing London that tops our list, according to data from MasterCard.
Growth and quality are as important as size in our rankings, so smaller but briskly growing economies like Seoul, South Korea, and Hong Kong also make the list. North America, with relatively lower growth areas, still boasts a number of cities in the current power list, including New York, Chicago, Los Angeles and Toronto, the latter of which squeezes past Madrid, Spain; Philadelphia and Mexico City, Mexico.
Pinning down the data to compare cities isn’t as easy as it sounds, but luckily, several corporations have done detailed studies of the economies of global cities.
The auditing giant PricewaterhouseCoopers has compiled estimates of the GDP (as measured by purchasing power parity) of the largest urban economies and how fast those economies are growing from 2005 to 2020.
MasterCard has created an annual “centers of commerce” index, which ranks cities on a host of factors, including legal and political framework, economic stability, the ease of doing business, the financial flow, convenience as a business center, information flow and livability.
UBS publishes an estimate of living expenses and earnings in the world’s largest cities. This report also includes estimates of how much the earnings of the average worker can actually purchase in the city.
The overarching lesson: Keep looking east. The world’s fastest-growing economies, such as Shanghai, China; Beijing, Jakarta, Indonesia; and Mumbai, India, are growing at twice the pace of the Western world.
Cities with enormous populations like Sao Paolo, Brazil, and Mexico City also have economies projected to grow by more than 4% annually. They won’t be the size of Tokyo or New York anytime soon, but with business-friendly policies, their economic power can be expected to continue climbing.
1 London 2 Hong Kong 3 New York 4 Tokyo 5 Chicago 6 Seoul 7 Paris 8 Los Angeles 9 Shanghai 10 Toronto
Inflation, speculation fuel steady rise in building materials costs
Brad Berton July 18, 2008
If you think the dramatic decline in homebuilding here and across the country has eased long-running building materials inflation in Silicon Valley, think again. And get used to regular price hikes ahead.
While lumber prices have stabilized and heavier competition has put a lid on labor costs, prices that suppliers charge for all manner of popular commercial building materials are once again moving up rapidly. Double-digit cost increases are hitting not just basic commercial building components such as structural and galvanized steel, but also interior build-out materials such as drywall, ceiling components, utilities conduits and insulation.
According to the latest price lists from major Silicon Valley commercial building products distributors, such as CALPLY and Allied Building Products/Acoustical Material Services, contractors can expect some significant additional hikes in coming months, says Scott Greubel, project executive with DPR Construction in San Jose.
Forecasting firm Global Insight reports that the average U.S. price for steel rebar, widely used to reinforce concrete building components, has risen from about $575 per ton at the end of 2007 to more than $850 a ton by June. It could approach $1,000 a ton later this year.
Chalk it up to the big run-ups in petroleum prices, bristling demand in some foreign lands and an ongoing commercial interior building boom in Silicon Valley as companies continue expanding and relocating to new facilities. And according to Greubel and John Marmesh, a principal with Tico Construction in San Jose, speculative investment in materials and commodities markets probably share some of the blame.
Building materials made of steel have seen particular inflation since last fall, with heavy-use products such as the galvanized steel used in ventilation ducts up 30 percent to 40 percent or more. Copper prices have been erratically "spiking" in both directions, which leads Greubel to believe that speculation is partly to blame.
While construction costs have eased in many markets across the country now that homebuilders are idled, that's just not the case in other markets in the valley that are still seeing plentiful commercial construction, reports Karl Almstead, the Turner Construction Co. vice president who compiles the national Turner Building Cost Index.
He cites uncertainty over materials' availability and costs as well as a general shortage of skilled labor for price increases. Almstead is expecting nonresidential construction costs to continue increasing through the end of the year and probably into 2009.
Indeed, as Greubel and colleagues are all too aware, prices of pretty much any building product made with metal or petroleum-based materials seem certain to continue inflating. DPR already has been factoring monthly general materials cost hikes of 1 percent to 2 percent -- well into double-digits on an annualized basis -- into its budget projections.
Contractors have little choice but to pass these costs along to clients, whether landlords or the businesses slated to occupy improved spaces. In either case, the inflation cuts into profits.
With more contractors competing for jobs, and factoring in higher materials costs, contractor margins are indeed shrinking a bit, Greubel acknowledged.
"It's just a more competitive market today," he continued, adding that any margin erosion compared with 2007 depends on multiple factors defining any particular job.
Depending on how much costs of key materials rise, some planned building and development projects might no longer be economically feasible.
"It's bound to affect your bottom line if you're developing a multimillion-dollar project and some of your materials costs rise 25 percent" over several months, Marmesh says. However, neither he nor Greubel has yet encountered a situation in which developers or users have opted to cancel a project because of the higher construction costs.
Project viability today depends more on a developer's ability to secure financing than purely costs-related factors, Greubel said. Hence, if commercial developers haven't signed precommitted tenants to leases at acceptable rental rates, construction lenders are unlikely to risk financing a project, he said.
Singapore Defers S$1.7 Billion of Projects on Building Costs
By Jean Chua
July 22 (Bloomberg) -- Singapore is deferring a further $1.7 billion ($1.3 billion) of construction projects as material and labor costs rose as much as 5 percent in the first quarter, National Development Minister Mah Bow Tan said today.
This brings the total value of public-sector projects deferred in the city-state to S$4.7 billion, Mah said in a written reply to lawmakers e-mailed to reporters today. Building costs rose 30 percent last year and labor and equipment prices jumped 19 percent, Mah said in the statement.
``Projects that are essential to meet Singapore's economic and social needs, such as key infrastructural development, will proceed as planned,'' Mah said. ``We will continue to monitor the situation closely and work with the key industry stakeholders such as developers, builders and quantity surveyors to mitigate the cost increase as much as possible.''
Prices of materials used in construction such as steel bars and concrete have risen to record highs because of global demand increasing fuel costs. Singapore is building two casino-resorts that will cost more than $3 billion each, as well as an extension of its subway system and a S$1.2 billion sports facility to boost economic growth.
The government will continue to monitor the situation and work with the construction industry to mitigate the cost increase as much as possible, Mah said.
TEHRAN (AFP) — Iran, the number two oil producer in OPEC, reaffirmed on Tuesday that it was against any hike in the cartel's output quota despite continued high crude prices.
"The market is in a good situation," Oil Minister Gholam Hossein Nozari told reporters in Tehran on the sidelines of a petrochemical conference.
"In the next OPEC meeting we are heading towards winter. I think that preserving the current situation is the most appropriate one," he added.
The Organisation of Petroleum Exporting Countries is scheduled to hold its next regular meeting on September 9 in Vienna.
Algerian Energy Minister and President Chakib Khelil said on Monday that OPEC states possess "considerable excess oil capacity that would be able to satisfy any increase in demand for crude."
Iran receives the majority of its foreign currency earnings through oil exports and has vehemently resisted calls from consumer countries like the United States for a hike in the OPEC output quota.
The Islamic republic has also been at odds with the West over its nuclear programme, which it says is only aimed at producing electricity but the West fears could be used to produce nuclear weapons.
Oil prices struck record highs above 147 dollars earlier this month, boosted by weakness in the US dollar and simmering tensions over the nuclear standoff.
Iran, which borders the Gulf and the Strait of Hormuz through which around 40 percent of the world's oil supply crosses, has not ruled out blocking the passage in case of an attack.
NEW YORK (MarketWatch) -- Gold futures fell 2%, reversing early gains, as U.S. dollar strength and a sharp fall in oil futures prompted traders to sell the precious metal.
Gold for August delivery dropped $16.70, or 2%, to $947 an ounce on the New York Mercantile Exchange.
On Monday, gold rose $5.70 to end at $963.70 an ounce on the Nymex.
"Conditions changed as soon as Paulson and Plosser injected a fresh dose of adrenaline into the U.S. dollar with their comments," said Jon Nadler, senior analyst at Kitco Bullion Dealers.
"We saw oil and the commodity complex undergo a bout of selling on the news, and quite promptly," Nadler said. "No one wants to fully bet on an imminent rise in the greenback; however, the official statements did manage to overcome the dollar weakness that was seen early in the day."
The dollar got a lift Tuesday from a Federal Reserve official's implication that U.S. interest rates should go higher, and extended gains as crude-oil futures sank and Wall Street recovered from early lows.
The dollar index, a measure of the greenback against a trade-weighted basket of currencies, rose 0.9% to 72.49.
Philadelphia Federal Reserve Bank President Charles Plosser said Tuesday that very accommodative monetary policy needs to be reversed and the rate hikes will need to begin soon.
Higher interest rates are usually positive for a currency, because they boost the return on assets denominated in that currency. Treasury Secretary Henry Paulson also reaffirmed U.S. support for a strong dollar in a speech Tuesday.
In the energy market, crude-oil futures fell more than $5 Tuesday, changing hands at the lowest price in nearly seven weeks and leading broad losses in energy commodities, as worries eased that Tropical Storm Dolly will hit major oil and gas facilities in the Gulf of Mexico.
The Reuters/Jefferies CRB Index, a benchmark gauging the prices of major commodities, fell 1.8%.
Also on the Nymex, September silver fell 39 cents to $18.04 an ounce and October platinum dropped $28 to $1,823 an ounce.
September palladium fell $3.45 to $411.50 an ounce, while September copper was unchanged at $3.68 a pound.
On the equities side, the Amex Gold Bugs Index fell 2.7% to 434.03 points.
The SPDR Gold Trust dropped 1.9% to $93.34, the iShares Silver Trust ETF fell 2.4% to $177.93 and the Market Vectors-Gold Miners ETF dropped 3.4% to $47.07.
5 comments:
World’s Most Economically Powerful Cities
Joshua Zumbrun
15th July 2008
What’s the world’s most economically powerful city?
If you picked New York or Tokyo, you’d be wrong.
But when Forbes.com set out to measure the world’s most powerful cities, the lack of useful data was surprising.
For sovereign nations, it’s easy to find measures of almost every variable imaginable--gross domestic product (GDP), inflation, money flows and other metrics. After all, the United Nations, the World Bank and the International Monetary Fund all deal with governments at the national level. But for corporations, cities and their economies matter most, since picking the right city will be the key to prosperity in the future.
Corporations, and even individuals, have to weigh the size of a city’s economy compared to how it will be in the future and consider the potential growth in the intervening years. For that matter, they have to judge whether it’s worth it to settle for a city that has high growth prospects but turns out to be a lousy place to live.
To create our ranking of economic power, we looked at all of these factors to see who’s strong across the board.
While Tokyo and New York are far and away the largest economies of today and tomorrow, they are growing much slower than many. Thus it’s fast-growing London that tops our list, according to data from MasterCard.
Growth and quality are as important as size in our rankings, so smaller but briskly growing economies like Seoul, South Korea, and Hong Kong also make the list. North America, with relatively lower growth areas, still boasts a number of cities in the current power list, including New York, Chicago, Los Angeles and Toronto, the latter of which squeezes past Madrid, Spain; Philadelphia and Mexico City, Mexico.
Pinning down the data to compare cities isn’t as easy as it sounds, but luckily, several corporations have done detailed studies of the economies of global cities.
The auditing giant PricewaterhouseCoopers has compiled estimates of the GDP (as measured by purchasing power parity) of the largest urban economies and how fast those economies are growing from 2005 to 2020.
MasterCard has created an annual “centers of commerce” index, which ranks cities on a host of factors, including legal and political framework, economic stability, the ease of doing business, the financial flow, convenience as a business center, information flow and livability.
UBS publishes an estimate of living expenses and earnings in the world’s largest cities. This report also includes estimates of how much the earnings of the average worker can actually purchase in the city.
The overarching lesson: Keep looking east. The world’s fastest-growing economies, such as Shanghai, China; Beijing, Jakarta, Indonesia; and Mumbai, India, are growing at twice the pace of the Western world.
Cities with enormous populations like Sao Paolo, Brazil, and Mexico City also have economies projected to grow by more than 4% annually. They won’t be the size of Tokyo or New York anytime soon, but with business-friendly policies, their economic power can be expected to continue climbing.
1 London
2 Hong Kong
3 New York
4 Tokyo
5 Chicago
6 Seoul
7 Paris
8 Los Angeles
9 Shanghai
10 Toronto
Inflation, speculation fuel steady rise in building materials costs
Brad Berton
July 18, 2008
If you think the dramatic decline in homebuilding here and across the country has eased long-running building materials inflation in Silicon Valley, think again. And get used to regular price hikes ahead.
While lumber prices have stabilized and heavier competition has put a lid on labor costs, prices that suppliers charge for all manner of popular commercial building materials are once again moving up rapidly. Double-digit cost increases are hitting not just basic commercial building components such as structural and galvanized steel, but also interior build-out materials such as drywall, ceiling components, utilities conduits and insulation.
According to the latest price lists from major Silicon Valley commercial building products distributors, such as CALPLY and Allied Building Products/Acoustical Material Services, contractors can expect some significant additional hikes in coming months, says Scott Greubel, project executive with DPR Construction in San Jose.
Forecasting firm Global Insight reports that the average U.S. price for steel rebar, widely used to reinforce concrete building components, has risen from about $575 per ton at the end of 2007 to more than $850 a ton by June. It could approach $1,000 a ton later this year.
Chalk it up to the big run-ups in petroleum prices, bristling demand in some foreign lands and an ongoing commercial interior building boom in Silicon Valley as companies continue expanding and relocating to new facilities. And according to Greubel and John Marmesh, a principal with Tico Construction in San Jose, speculative investment in materials and commodities markets probably share some of the blame.
Building materials made of steel have seen particular inflation since last fall, with heavy-use products such as the galvanized steel used in ventilation ducts up 30 percent to 40 percent or more. Copper prices have been erratically "spiking" in both directions, which leads Greubel to believe that speculation is partly to blame.
While construction costs have eased in many markets across the country now that homebuilders are idled, that's just not the case in other markets in the valley that are still seeing plentiful commercial construction, reports Karl Almstead, the Turner Construction Co. vice president who compiles the national Turner Building Cost Index.
He cites uncertainty over materials' availability and costs as well as a general shortage of skilled labor for price increases. Almstead is expecting nonresidential construction costs to continue increasing through the end of the year and probably into 2009.
Indeed, as Greubel and colleagues are all too aware, prices of pretty much any building product made with metal or petroleum-based materials seem certain to continue inflating. DPR already has been factoring monthly general materials cost hikes of 1 percent to 2 percent -- well into double-digits on an annualized basis -- into its budget projections.
Contractors have little choice but to pass these costs along to clients, whether landlords or the businesses slated to occupy improved spaces. In either case, the inflation cuts into profits.
With more contractors competing for jobs, and factoring in higher materials costs, contractor margins are indeed shrinking a bit, Greubel acknowledged.
"It's just a more competitive market today," he continued, adding that any margin erosion compared with 2007 depends on multiple factors defining any particular job.
Depending on how much costs of key materials rise, some planned building and development projects might no longer be economically feasible.
"It's bound to affect your bottom line if you're developing a multimillion-dollar project and some of your materials costs rise 25 percent" over several months, Marmesh says. However, neither he nor Greubel has yet encountered a situation in which developers or users have opted to cancel a project because of the higher construction costs.
Project viability today depends more on a developer's ability to secure financing than purely costs-related factors, Greubel said. Hence, if commercial developers haven't signed precommitted tenants to leases at acceptable rental rates, construction lenders are unlikely to risk financing a project, he said.
Singapore Defers S$1.7 Billion of Projects on Building Costs
By Jean Chua
July 22 (Bloomberg) -- Singapore is deferring a further $1.7 billion ($1.3 billion) of construction projects as material and labor costs rose as much as 5 percent in the first quarter, National Development Minister Mah Bow Tan said today.
This brings the total value of public-sector projects deferred in the city-state to S$4.7 billion, Mah said in a written reply to lawmakers e-mailed to reporters today. Building costs rose 30 percent last year and labor and equipment prices jumped 19 percent, Mah said in the statement.
``Projects that are essential to meet Singapore's economic and social needs, such as key infrastructural development, will proceed as planned,'' Mah said. ``We will continue to monitor the situation closely and work with the key industry stakeholders such as developers, builders and quantity surveyors to mitigate the cost increase as much as possible.''
Prices of materials used in construction such as steel bars and concrete have risen to record highs because of global demand increasing fuel costs. Singapore is building two casino-resorts that will cost more than $3 billion each, as well as an extension of its subway system and a S$1.2 billion sports facility to boost economic growth.
The government will continue to monitor the situation and work with the construction industry to mitigate the cost increase as much as possible, Mah said.
Iran opposes OPEC oil output hike
22 July 2008
TEHRAN (AFP) — Iran, the number two oil producer in OPEC, reaffirmed on Tuesday that it was against any hike in the cartel's output quota despite continued high crude prices.
"The market is in a good situation," Oil Minister Gholam Hossein Nozari told reporters in Tehran on the sidelines of a petrochemical conference.
"In the next OPEC meeting we are heading towards winter. I think that preserving the current situation is the most appropriate one," he added.
The Organisation of Petroleum Exporting Countries is scheduled to hold its next regular meeting on September 9 in Vienna.
Algerian Energy Minister and President Chakib Khelil said on Monday that OPEC states possess "considerable excess oil capacity that would be able to satisfy any increase in demand for crude."
Iran receives the majority of its foreign currency earnings through oil exports and has vehemently resisted calls from consumer countries like the United States for a hike in the OPEC output quota.
The Islamic republic has also been at odds with the West over its nuclear programme, which it says is only aimed at producing electricity but the West fears could be used to produce nuclear weapons.
Oil prices struck record highs above 147 dollars earlier this month, boosted by weakness in the US dollar and simmering tensions over the nuclear standoff.
Iran, which borders the Gulf and the Strait of Hormuz through which around 40 percent of the world's oil supply crosses, has not ruled out blocking the passage in case of an attack.
Gold falls sharply on oil drop, dollar strength
By Polya Lesova
July 22, 2008
NEW YORK (MarketWatch) -- Gold futures fell 2%, reversing early gains, as U.S. dollar strength and a sharp fall in oil futures prompted traders to sell the precious metal.
Gold for August delivery dropped $16.70, or 2%, to $947 an ounce on the New York Mercantile Exchange.
On Monday, gold rose $5.70 to end at $963.70 an ounce on the Nymex.
"Conditions changed as soon as Paulson and Plosser injected a fresh dose of adrenaline into the U.S. dollar with their comments," said Jon Nadler, senior analyst at Kitco Bullion Dealers.
"We saw oil and the commodity complex undergo a bout of selling on the news, and quite promptly," Nadler said. "No one wants to fully bet on an imminent rise in the greenback; however, the official statements did manage to overcome the dollar weakness that was seen early in the day."
The dollar got a lift Tuesday from a Federal Reserve official's implication that U.S. interest rates should go higher, and extended gains as crude-oil futures sank and Wall Street recovered from early lows.
The dollar index, a measure of the greenback against a trade-weighted basket of currencies, rose 0.9% to 72.49.
Philadelphia Federal Reserve Bank President Charles Plosser said Tuesday that very accommodative monetary policy needs to be reversed and the rate hikes will need to begin soon.
Higher interest rates are usually positive for a currency, because they boost the return on assets denominated in that currency. Treasury Secretary Henry Paulson also reaffirmed U.S. support for a strong dollar in a speech Tuesday.
In the energy market, crude-oil futures fell more than $5 Tuesday, changing hands at the lowest price in nearly seven weeks and leading broad losses in energy commodities, as worries eased that Tropical Storm Dolly will hit major oil and gas facilities in the Gulf of Mexico.
The Reuters/Jefferies CRB Index, a benchmark gauging the prices of major commodities, fell 1.8%.
Also on the Nymex, September silver fell 39 cents to $18.04 an ounce and October platinum dropped $28 to $1,823 an ounce.
September palladium fell $3.45 to $411.50 an ounce, while September copper was unchanged at $3.68 a pound.
On the equities side, the Amex Gold Bugs Index fell 2.7% to 434.03 points.
The SPDR Gold Trust dropped 1.9% to $93.34, the iShares Silver Trust ETF fell 2.4% to $177.93 and the Market Vectors-Gold Miners ETF dropped 3.4% to $47.07.
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