20100325 1107 Global Economic News.

US new home sales fell to a record low in February, as the glut of foreclosed homes and a weak economy dampened the housing market.

• New-home sales fell 2.2% to a seasonally adjusted rate of 308,000 last month, compared to a upwardly revised annual rate of 315,000 in January. It was the lowest rate since the government began keeping records in 1963 and marked the fourth straight month of declines. 
• A consensus of economists expected February sales to rise to an annual rate of 315,000. New-home sales were down 13% from February 2009. (CNN Money)

US durable goods orders printed +0.5% in February (+3.9% in Jan), marking its third gain in a row, but this was slightly less than anticipated and suggests a slower take-off in the economy than some expected. Excluding transportation orders printed +0.9% (-0.6% in Jan), and excluding defense printed +1.6% in a sixth gain. These are consistent with economic recovery. Boeing Corp. reported 47 new orders after 10 in January, and non defense aircraft orders were up 32.7%. (Xinhua)

The US Mortgage Bankers Association's Weekly Mortgage Applications Survey showed refinancing activity was down 7.1%, the purchase index up 2.7% and the Market Composite down 4.2%. (Xinhua)

Federal Reserve Bank of Kansas City President Thomas Hoenig said a proposal to strip the Fed of supervision over 5,000 banks would worsen the next financial crisis by denying policy makers information about the firms. The central bank draws on insights from bank oversight while making monetary policy, Hoenig said. (Bloomberg)

Fitch Ratings downgraded Portugal for the first time, cutting its rating by one notch and warning that further reductions were possible. Douglas Renwick, associate director at Fitch, said: “A sizeable fiscal shock against a backdrop of relative macro- economic and structural weaknesses has reduced Portugal’s creditworthiness.

• Despite the downgrade, Portugal's debt is still considered investment grade and still a few notches above its rating of crisis-stricken Greece. Portugal’s government seeks to push through an austerity plan aimed at slashing the budget deficit from 9.3% of GDP last year to 2.8% in 2013. (Associated Press)

China’s government needs evidence of a “very certain” recovery before it can roll back stimulus measures adopted during the crisis, central bank Governor Zhou Xiaochuan said.

• “If you can be sure about the recovery, and then some of the extraordinary stimulus policies can gradually fade out,” Zhou said. “On the other hand, you should know that it’s not a w-shape recovery,” with a renewed slowdown following the current rebound, he said. 
• Withdrawal of fiscal and monetary stimulus needs “sequencing,” the People’s Bank of China governor also said. “For many nations, the consensus is fiscal policies should be phased out lastly.”
• China will coordinate with other countries, especially the G-20 nations, on a stimulus exit, Zhou said, adding that G-20 leaders will assess the status of the economic recovery at a summit in Canada in June. (Bloomberg)

Japan’s exports climbed at the fastest pace in 30 years in February, as shipments abroad increased 45.3% yoy (40.8% in Jan). The surge was partly due to a favourable year-onyear comparison. In February 2009, shipments abroad tumbled a record 49.4% as global trade froze. Exports fell a seasonally adjusted 1.7% from January. (Bloomberg)

Indonesia needs to demonstrate that it can sustain its economic policy framework in order to achieve an investment-grade debt rating, according to Fitch Ratings. “That kind of policy sustainability despite changes in personnel and government is a feature of highrated sovereigns,” Fitch director Andrew Colquhoun said. (Bloomberg)

Europe’s service and manufacturing industries expanded at the fastest pace in 2 1/2 years in March as reviving global demand prompted companies to step up output. A composite index based on a survey of euro-area purchasing managers in both industries rose to 55.5 from 53.7 in February. That’s the fastest pace since Aug 07. Economists forecast a gain to 53.8. (Bloomberg)

European industrial orders unexpectedly declined 2.0% mom in January (+0.8% in Dec 09) led by a slump in demand for capital goods such as machinery. From the year-earlier month, January industrial orders rose 7.0% (9.5% in Dec 09). Economists forecast an increase of 1.8% mom and 13.9% yoy for January. (Bloomberg)

South Korea’s consumer confidence declined for a second month in March, a sign the nation’s economic recovery may be slowing. The sentiment index fell to 110 from 111 in February, marking the lowest level since Jul 09 when it was 109. (Bloomberg)

Japan’s parliament yesterday approved a record US$1.0tr budget for the fiscal year from April, with an all-time high of ¥44.3tr in new bond issuance underlining its public finance troubles. The government is resisting pressure to spend more on stimulating the economy, saying it should now manage to avoid sinking back into recession. But Prime Minister Yukio Hatoyama said it should still be ready to act if necessary given lingering downside risks such as unemployment. (Financial Daily)

India’s central bank will continue exiting stimulus after unexpectedly raising its benchmark interest rate last week, Governor Duvvuri Subbarao said. “It is better to take action now and continue the exit Strategy. We may have to sacrifice on growth in the near term,” Subbarao noted. (Bloomberg)