Wednesday, May 2, 2012

20120502 1142 Global Economy Related News.

Indonesia: Inflation accelerates to seven-month high of 4.5%
Indonesia’s inflation accelerated to a seven-month high in April, rising above 4% and putting pressure on the central bank to hold off on further cuts in interest rates. Consumer prices rose 4.5% last month from a year earlier, the Central Bureau of Statistics said. That compares with a 3.97% increase reported in March. The median of 17 forecasts in a Bloomberg News survey was for a 4.46% gain. (Bloomberg)

India: Exports contracted in March for first time since 2009
Indian exports fell in March for the first time in two and a half years as Europe’s debt crisis and slower Chinese growth hurt demand. Merchandise shipments dropped 5.7% from a year earlier to USD28.7bn, the government said. Imports rose 24.3% to USD42.6bn, leaving a trade deficit of USD13.9bn. Exports last shrank year-on-year in Sept 2009. (Bloomberg)

China: Manufacturing index at year high eases loosening pressure
China’s manufacturing expanded at the fastest pace in a year, reducing pressure on policy makers to open the taps on credit in the world’s second-largest economy. The Purchasing Managers’ Index rose to 53.3 in April from 53.1 in March, China’s statistics bureau and logistics federation said. That’s the fifth straight reading above the 50 level dividing expansion from contraction and compares with the 53.6 median forecast in a Bloomberg News survey of 27 economists. (Bloomberg)

Australia: RBA cuts key rate more than forecast as inflation eases
The Reserve Bank of Australia cut its benchmark interest rate by half a percentage point as inflation pressures abate, delivering a bigger-than-forecast reduction that sent the local dollar and bond yields tumbling. Governor Glenn Stevens and his board slashed the overnight cash rate target to a two-year low of 3.75% from 4.25%, the deepest reduction in three years, according to a central bank statement. Two of 29 economists surveyed by Bloomberg News predicted the move, while the other 27 forecast a quarter-point reduction. (Bloomberg)

South Korea: Inflation moderated to lowest in 21 months
South Korea’s inflation moderated to a 21-month low in Apr, giving the central bank more leeway to hold off increasing interest rates. According to Statistics Korea, consumer prices increased 2.5% from a year earlier, after a 2.6% gain in Mar. The median estimate in a Bloomberg News survey of 13 economists was for a 2.8% gain. Prices were unchanged from Mar. (Bloomberg)

South Korea: Exports declined for second month in April
South Korea’s exports declined for a second month in Apr and inflation cooled, adding pressure on the central bank to hold interest rates next week. The Ministry of Knowledge Economy said overseas shipments fell 4.7% from a year earlier, after a 1.4% decline in Mar. The median estimate in a Bloomberg News survey of 13 economists was for a 1.1% drop. (Bloomberg)

Singapore: Signals policy tightening won’t fully offset prices
The Monetary Authority of Singapore signaled that the tightening of Singapore’s monetary policy earlier this month won’t completely counter price  pressures, as efforts to reduce foreign workers in the economy push up business costs. It said while changes in the foreign worker policy are necessary to ensure a more efficient allocation of resources and a more productive workforce over the medium term, the latter will take time to come to fruition. It added that the policy tightening is intended to temper, but not fully offset, the pass-through of these supply-side cost increases. GDP will probably increase 1% to 3% this year, the central bank said, reiterating earlier forecasts. Employment may grow at a slower pace in 2012 even as local wages may climb at a healthy rate. (Bloomberg)

Singapore: Unemployment rate rises to 2.1% in March
Singapore's seasonally adjusted overall unemployment rate increased slightly to 2.1% in March 2012 from 2.0% in Dec last year. Total employment is estimated to have grown by 27,400 in 1Q 2012. The increase was lower than the seasonal high of 37,600 in the 4Q 2011 and the 28,300 in 1Q 2011. These are the key findings from the "Employment Situation, First Quarter 2012" report, released by the Ministry of Manpower Research and Statistics Department. Similarly, it said the unemployment rate rose over the same period for residents from 2.9% to 3.0% and citizens from 3.0% to 3.2%. (Bernama)

Germany: Retail sales rebounded in March on job creation
German retail sales rebounded in Mar as declining unemployment, slowing inflation and higher wages bolstered households’ purchasing power. According to the Federal Statistics Office, sales after adjusted for inflation and seasonal swings, rose 0.8% from Feb, when they fell a revised 0.9%. Economists forecast a gain of 1%, the median of 26 estimates in a Bloomberg News survey showed. Sales increased 2.3% from a year earlier. With German unemployment at a two-decade low and the economy outperforming most of its euro-region peers, workers are winning some of the highest pay increases since the early 1990s. Business confidence unexpectedly rose to a nine-month high in April and inflation slowed to the lowest level in more than a year, boosting consumers’ disposable income. (Bloomberg)

Spain: GDP contracts less than forecast amid recession
Spain’s economy shrank less than previously forecast in 1Q 2012 as the economy officially entered its second recession since 2009. The National Statistics Institute said that GDP fell 0.3%, the same as in the previous three months. That compares with the Bank of Spain’s estimate on Apr 23 of a 0.4% decline. From  a year ago, GDP fell 0.4%, INE said. Spain’s government is struggling to convince investors it can narrow the budget deficit by 3.2%age points of GDP this year as the economy shrinks and unemployment approaches 25%. It forecasts an economic contraction of 1.7% in 2012 and an expansion of 0.2% in 2013 that will leave the jobless rate at about 24%. (Bloomberg)

Portugal: Reduces 2013 spending limits in budget plan
The Portuguese government reduced spending limits for next year as part of its effort to curb debt and regain access to bond markets. The government will reduce its primary spending limit by 3.2% in 2013 and lower the limit for total spending by 2.1%. The plans are included in the government’s budget outline for the 2013-2016 period. Finance Minister Vitor Gaspar said the economy will be in a recession this year and 2013 will be the start of the economic recovery. Gaspar also said the government is sticking to its target for a budget deficit of 3% of GDP in 2013, when the ratio of debt-to-GDP is forecast to peak at 115.7%. (Bloomberg)

UK: Factory index falls more than forecast on export slump
A UK manufacturing index fell more than economists forecast in April to show its weakest growth this year as export orders declined the most since May 2009. A gauge of factory output, based on a survey by Markit Economics and the Chartered Institute of Purchasing and Supply, dropped to 50.5 from a revised 51.9 in March, Markit said. The median forecast of 27 economists in a Bloomberg News survey was for a decline to 51.5 from an initial estimate of 52.1 in March. A reading above 50 indicates growth. (Bloomberg)

UK: King faces 10 days of angst on BOE stimulus
Bank of England Governor Mervyn King has 10 days left to make up his mind on whether he can risk halting stimulus for an economy trying to shake off a recession. Reports starting Tuesday on manufacturing, construction and services, as well as consumer credit and house prices, will set the scene for data crunching by officials building up to a decision on quantitative easing on May 10. King and the 8 other members of the Monetary Policy Committee will discuss new economic forecasts that will determine whether they extend QE or halt it at 325bn pounds ($529bn). Overshadowing the MPC’s deliberations is the UK’s first double-dip recession since the 1970s as its longest peacetime slump for a century persists. While GDP has fallen for the past two quarters, King must also take into account an inflation rate that is above the central bank’s target and policy makers’ forecasts. (Bloomberg)

UK: House prices rise in demand boost that may fade
UK house prices rose in April for a second month, according to Hometrack Ltd, which said gains may not be sustained as demand fails to keep up with supply. The London-based property research company said values rose 0.1% from Mar, when they increased 0.2%. An indicator of demand rose at half the pace seen in the previous month. The property market received a temporary boost this year as first-time buyers rushed to take advantage of a tax holiday on some homes before it expired on Mar 24. Hometrack said demand may be undermined by Britain’s return to recession and a continued squeeze on consumers from higher energy prices. (Bloomberg)

EU: Anti-austerity calls mount as elections near
A recession in Spain and forecasts of rising unemployment in the 17-nation euro area are amplifying criticism of the German-led austerity agenda in election campaigns this week in France and Greece. With Spain’s largest unions leading marches involving thousands of protesters in 55 cities Sunday, Prime Minister Mariano Rajoy’s government battled to prevent Spain from becoming the next country to seek a bailout. In France, where the presidential-election runoff is set for May 6, Socialist frontrunner Francois Hollande pushed back against German Chancellor Angela Merkel’s focus on deficit reduction. As Spanish joblessness reached almost one in four of the working-age population, Hollande demanded that euro-area leaders move to promoting growth from cutting budgets, as agreed by 25 European governments in the so-called fiscal pact. Merkel drew the line at re-opening talks on the fiscal treaty, though she said growth could be boosted with labor-market reform and EU funding. (Bloomberg)

US: Manufacturing grows at fastest pace in a year
Manufacturing grew in April at the fastest pace in almost a year, propelled by a pickup in orders that signalled factories will remain a source of strength for the US expansion. The Institute for Supply Management’s factory index climbed to 54.8 last month, exceeding the most optimistic forecast in a Bloomberg News survey and the best reading since June, the Tempe, Arizona-based group’s report showed. Readings greater than 50 signal growth. (Bloomberg)

US: Fed said to criticize banks for risk models in stress tests
People with knowledge of the process said the Federal Reserve criticized how some of the 19 largest US banks calculated potential losses and planned dividends in this year’s stress tests. The critiques will be part of feedback letters sent to the lenders this week that cover everything from data collection to risk measurement, said 3 of the people, who declined to be identified because communications with the Fed are private. Flaws included marking down all housing prices at the same rate, rather than matching them to specific regions, and planning dividends that could drain needed capital. (Bloomberg)

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