20100302 0921 Global Economic News.

US manufacturing activity expanded in February for the seventh straight month, but at a slower pace, according to the Institute for Supply Management (ISM)'s manufacturing index. The index slipped to 56.5 from 58.4 in January. Economists expected the index to fall slightly to 58.

• The ISM's new orders index and production index both fell to just below 60 in February. The ISM's production index was 58.4 (66.2 in Jan). The employment index rose to 56.1 (53.3 in Jan). This is the third month of employment growth and the highest reading since January 2005. (CNN Money)

US consumer spending increased in January for a fourth consecutive month. The 0.5% increase in purchases was more than anticipated and followed a 0.3% gain in December. The median estimate called for a 0.4% increase in spending. Adjusted for inflation, spending climbed 0.3% (+0.1% in Dec 09).

• Incomes climbed 0.1% (+0.3% in Dec 09), short of expectations and reflecting declines in dividends and interest. Disposable income dropped 0.4%, the largest decrease since July, reflecting an increase in federal non-withheld income taxes. 
• The inflation gauge tied to spending patterns rose 2.1% yoy, less than the 2.2% median forecast. The Federal Reserve’s preferred price measure, which excludes food and fuel, was unchanged in January from the previous month and was up 1.4% yoy. (Bloomberg)

European manufacturing index accelerated to 54.2 from 52.4 in January, marking the fastest pace in more than two years as reviving global demand boosted export orders. That’s above an initial estimate of 54.1 published on 19 Feb and the highest since Aug 07. (Bloomberg)

European Union Economic and Monetary Affairs Commissioner Olli Rehn said Greece must take more steps to cut its budget deficit and urged the government to announce new measures “in the coming days.” “Given that risks related to macroeconomic and market developments are materializing, additional consolidation measures are necessary” to meet this year’s deficit-reduction target, Rehn said. (Bloomberg)

Italy’s budget deficit almost doubled last year as the economy shrank the most since World War II. The shortfall rose to 5.3% of GDP compared with 2.7% in 2008. That matched a forecast by the European Commission in Nov 09. The budget gap was about half the size of shortfalls in Greece, Portugal, Ireland and Spain. (Bloomberg)

Japanese Financial Services Minister Shizuka Kamei said the central bank should contemplate directly purchasing government debt, increasing political pressure for the policy board to overcome deflation. “The central bank should consider underwriting debt to help the government create funds for fiscal stimulus,” Kamei said. By law, the Bank of Japan is prohibited from buying debt directly. (Bloomberg)

South Korea’s exports rose 31.0% yoy to US$33.3bn in February (46.7% in Jan), while imports climbed 36.9% to US$30.9bn (26.4% in Jan), resulting in a trade surplus of US$2.3bn (-US$0.5bn in Jan). Economists forecast the exports and imports would increase by 25.0% and 38.0% respectively in February. (Bloomberg)

China’s Purchasing Managers’ Index for manufacturing grew at a slower pace to 52.0 in February (55.8 in Jan). Another PMI, from HSBC Holdings Plc and Markit Economics, showed the weakest expansion in three months to 55.8 from 57.4 in January. A weeklong Chinese holiday last month may have affected the numbers. (Bloomberg)

China's central government has allocated RMB28.6bn (US$4.2bn) to support farmers, the Ministry of Finance said. The bulk of the funding -- RMB18.6bn -- would be used to subsidize farmers in growing improved varieties of crops such as rice, corn, and cotton. The financial support for agriculture came as a severe drought continues in the nation's west and south. (Xinhua)

Indonesia’s inflation accelerated to 3.81% yoy in February (3.72% in Jan), marking the fastest pace in nine months amid rising commodity and food prices, putting pressure on the central bank to raise interest rates this year. Market forecast for a 3.97% rise in February. (Bloomberg)

Indonesia’s exports rose 59.0% yoy to US$11.6bn in January (50% in Dec 09). That’s the biggest jump since at least Dec 95. Imports rose 44.6% yoy to US$9.5bn in January (33.8% in Dec 09), resulting in a trade surplus of US$2.0bn (US$3.0bn in Dec 09). Market forecast exports and imports would increase by 72.1% and 52.5% in January. (Bloomberg)

Singapore’s Senior Minister Goh Chok Tong has said this year's Budget may be seen as "unexciting" to some Singaporeans, but it is nonetheless strategically important because it is a "transformational" Budget. He said the aim of the Budget was to bring the economy to a higher level. (Channel News Asia)