20100409 1256 Global Economic News.

US initial jobless claims jumped 18,000 to 460,000 in the week ended 3 Apr (442,000 in the previous week), as seasonal factors were affected by Easter and the California Chavez holiday. Economists expected new claims to fall to 435,000 in the week. The report also said that 4,550,000 people filed continuing claims in the week ended 27 Mar, down 131,000 from the preceding week. (CNN Money)

Retail sales posted the biggest single monthly gain on record of 9.1% yoy in March, the seventh straight month of increase and a signal of rebounding consumer spending. Thomson had expected only a 6.3% increase. Most retailers forecast April results would be far more modest. (CNN Money)

The mortgage finance company Freddie Mac says the average rate on a 30-year fixed rate mortgage was 5.21% this week, up from 5.08% a week earlier. That's the highest since the week ending 13 Aug 09, when the average rate was 5.29%, due to the improving economy and the end of a government push to make mortgages cheaper. Rates had dropped to a record low of 4.71% in Dec 09, pushed down by a US$1.25tr campaign by the Federal Reserve to reduce consumers' borrowing costs, which ended last week. (CNBC)

Fed Vice Chair Donald Kohn said the Fed's decision to begin tightening will be based not on a particular indicator or small set of indicators, but rather on forecasts of economic activity and inflation that take account of all available information.

• 'We will want to make sure the economy has enough forward momentum to continue absorbing the unused resources and to limit disinflationary pressure. But we will also want to be sure that we haven't left highly accommodative policy in place so long that economic and financial conditions become conducive to future inflation.
• Given the lags in the effects of monetary policy that means we will not be able to wait until the unemployment rate is down close to its long-term level.' (Xinhua)

White House budget director Peter Orszag said that the US must "get ahead" of the long-term deficit problem, adding the report in December of a newly established deficit reduction commission could play a critical role in devising policies to bring down future deficits. (Xinhua)

Japanese machinery orders unexpectedly fell for a second month in February, a sign that the resurgence in overseas demand isn’t enough to compel companies to spend on plant and equipment. Orders, an indicator of business investment in three to six months, declined 5.4% from January. The median estimate was for a 3.7% gain. (Bloomberg)

Japanese corporate bankruptcies fell for an eighth month in March as the economy improved and government lending programs kept companies afloat. Business failures slid 14.5% yoy to 1,314 cases. For the fiscal year ended March 31, failures fell 8.8% from the previous 12 months, the first decline in four years. (Bloomberg)

Thailand’s consumer confidence fell for a second month in March on concern the nation’s economic recovery will be disrupted by escalating political unrest. An index measuring sentiment fell to 69.8 last month from 70.9 in February, the University of the Thai Chamber of Commerce said. That’s the lowest level in four months. (Bloomberg)

The European Central Bank (ECB) left interest rates at a record low of 1.0% as the Greek fiscal crisis complicates its withdrawal of emergency stimulus measures. This came in line with economists’ expectation. President Jean-Claude Trichet signaled the ECB is in no rush to tighten policy as the Greek crisis delays the central bank’s exit strategy, saying the ECB’s benchmark rate is “appropriate.” (Bloomberg)

European retail sales declined 0.6% mom in February (0.2% in Jan) as rising unemployment prompted consumers to cut back spending. That’s the biggest drop since May 09. Economists forecast sales to remain unchanged. From the year-earlier month, February retail sales declined 1.1%. (Bloomberg)

European Central Bank President Jean-Claude Trichet said he does not expect Greece to default on its debt and it probably won’t need financial aid from the European Union. “A default is not an issue for Greece. I will only repeat that what is important are the measures that are taken and implemented by the Greek government and the Greek parliament,” he said. (Bloomberg)

UK factory production jumped 1.0% mom to 90.1 in February (-0.5% in Jan). the highest level since 2008, a sign the weakness of the pound is aiding the economic recovery. Economists predicted a 0.5% gain. (Bloomberg)

The Bank of England kept its bond-purchase program unchanged at £200bn for a third month as it tries to sustain the economy’s recovery from the deepest recession since World War II. The bank, which didn’t comment on the economy or the outlook for policy, also kept its benchmark interest rate at a record low of 0.5%. (Bloomberg)

Southeast Asian countries may need to manage excessive short-term capital inflows to avoid destabilizing the region’s economic recovery, the International Monetary Fund (IMF) said. “Economic growth in the region may be 5.5% in 2010. Capital inflow is something that should be welcomed, but there are cases when excessive short-term capital flow could disturb sound economic management. Management options include fiscal tightening, exchange-rate flexibility, and reserve accumulation,” it said. (Bloomberg)

Confidence among Japanese merchants rose to 47.4 in March (42.1 in Feb), marking the highest in almost three years and signaling the benefits of the export-led recovery are beginning to reach households. Market forecast it would increase to 44.9 for March. (Bloomberg)

South Korea’s bank lending to households rose KRW1.9tr to KRW409.3tr for the first time in three months in March (KRW407.3tr in Feb) as mortgage loans increased. Mortgage lending increased by KRW1.7tr in March, the most since Dec 09. while loans to companies rose by KRW1.1tr to KRW514.3tr. The broadest measure of money supply, M2, grew 9.4% yoy in February (9.3% in Jan). (Bloomberg)

Southeast Asian governments will continue “supportive” policies to sustain their economies until private demand regains momentum, finance ministers from the region’s 10 nations said. Capital inflows are returning to the region and policy makers are “cognizant” of the risks that such funds bring. (Bloomberg)

A small one-off revaluation of the yuan may be a better option than returning to a gradual appreciation stance to help deter speculators, said Xia Bin, an adviser to the People’s Bank of China. China should move back to a “managed float” of the currency “as soon as possible” after keeping the exchange rate pegged at around Rmb6.83 per dollar since Jul 08. The central bank should widen the yuan’s daily trading band from 0.5%, declining to give comment on how much, he added. (Bloomberg)

Taiwan’s exports climbed 50.1% yoy for a fifth month in March (32.6% in Feb) as the recovery of the global economy boosted demand for the island’s electronic goods. Imports rose 80.3% (45.8% in Feb), resulting in a trade surplus of US$1.5bn in March (US$0.9bn in Feb). Economists forecast the exports and imports would increase by 41.1% and 68.0% respectively in the month. (Bloomberg)

Indonesia’s stocks are in a bubble and officials are prepared to put controls on capital inflows if needed to maintain financial stability, Perry Warjiyo, the head of the central bank’s economic research and monetary policy division said. “The actual stock price now is actually exceeding the fundamental value. Whatever methodology we use shows an excess valuation,” he noted. (Bloomberg)

India’s food inflation accelerated 17.7% yoy in the week ended 27 Mar for a second straight week, increasing pressure on the central bank to raise interest rates. It gained 16.4% in the previous week. (Bloomberg)

Japan's current account surplus expanded by 29.6% yoy to ¥1.47tr in February (¥0.9tr in Jan), thanks to a strong rise in exports outpacing the growth of imports, the finance ministry said. Strong Asian demand, however, has recently helped Japan's recovery. Economists projected it would increase to ¥1.62tr in February. (Channel News Asia)