Portugal: Social Democrats win vote, oust socialist Socrates
Portugal’s opposition Social Democrats ousted the ruling Socialists in elections, putting Pedro Passos Coelho in charge of enforcing austerity measures mandated by a EUR78bn (USD114bn) bailout. Coelho, who unseated Prime Minister Jose Socrates, said he would seek to forge a governing majority with the third-place People’s Party to enact budget cuts that risk worsening an economic slump and 12.4% unemployment rate. With 99% of districts reporting, the two parties won a combined 129 seats in the 230-member parliament. (Bloomberg)
Australia: La Nina-triggered flood bill to total AUD12bn
Australia’s bill from floods that devastated the nation’s northeast earlier this year climbed 33% to AUD12bn (USD13bn), with resources and agriculture the hardest hit, the government said. “Lost commodity production is likely to be around AUD9bn and damage to crops more than AUD2bn,” Treasurer Wayne Swan said. “We’ve seen economic data that clearly reflects the destruction.” (Bloomberg)
Egypt: IMF agrees to USD3bn Egypt lpan for Post-Mubarak transition
Egypt and a visiting International Monetary Fund mission agreed to a USD3bn loan as the North African country seeks to fund its widening budget deficit after a popular revolt earlier this year. The 12-month loan is part of wider international support pledges for Egypt, where the turmoil that accompanied the uprising that led to the ouster of President Hosni Mubarak has hurt revenue from tourism and industrial output. (Bloomberg)
EU: Preparing new Greek rescue after aid payout approved
European Union officials will focus on preparing a new aid package for Greece that includes a “voluntary” role for investors after the EU and the International Monetary Fund approved the fifth installment of Greece’s EUR110bn (USD161bn) bailout. (Bloomberg)
U.K: Bank of England will hold off increasing its benchmark interest rate next week as manufacturing and services surveys this week indicate the economic recovery is faltering. The nine-member Monetary Policy Committee, led by Governor Mervyn King, will leave the key rate at a record low of 0.5% on June 9, according to all 55 economists in a Bloomberg News survey. It will also keep its bond-purchase plan at GBP200b (USD326b), said all 35 economists in a separate poll. (Source: Bloomberg)
US: Trade gap probably widened in April
The US trade deficit probably widened in April to a 10-month high, reflecting higher crude oil costs that have since retreated, economists said before a report this week. The gap expanded to USD48.9bn from the USD48.2 bn shortfall in March, according to the median of 61 estimates in a survey ahead of the Commerce Department’s 9 June report. Other figures may show prices of goods from abroad decreased in May by the most in almost a year, showing the surge in commodity costs is fading. (Bloomberg)
U.S: Payrolls grew at the slowest pace in eight months and the jobless rate unexpectedly climbed to 9.1% in May, reinforcing signs that a slowdown in the worlds largest economy is persisting into the second quarter. Employers added a less-than-projected 54,000 jobs last month, after a revised 232,000 gain in April that was smaller than initially estimated, Labor Department figures showed. The jobless rate climbed to the highest level this year from 9% a month earlier. (Source: Bloomberg)
U.S: Service industries expanded more than forecast in May, tempering concern the world's largest economy is faltering. The Institute for Supply Managements index of non- manufacturing businesses increased to 54.6 from 52.8 in April. A reading above 50 signals expansion. (Source: Bloomberg)
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