20100504 0917 Global Economic News.

US manufacturing sector grew for the ninth consecutive month in April, and at its fastest rate since June 2004. The Institute for Supply Management (ISM) manufacturing index rose to 60.4 in April (59.6 in Mar). April's number is slightly better than expected, driven by increases in productivity, new orders and manufacturing jobs. Economists surveyed were expecting a reading of 60.

• "Overall, the recovery in manufacturing continues quite strong, and the signs are positive for continued growth," Norbert Ore, chairman of the ISM's survey committee, said. The employment component of the report grew for the fifth consecutive month, rising to 58.5 in April (55.1 in Mar). (CNN Money)

US personal spending rose for the sixth month in a row during March, while income also increased. Individual spending rose 0.6%, or US$36bn, last month after an upwardly revised 0.5% increase in February.

• Personal income climbed 0.3%, or US$32.3bn, in April following a 0.1% rise the month before. Both figures matched market estimates. The report also showed that personal savings as a percentage of disposable personal income, known as the savings rate, was 2.7% in March (3% in Feb). That was the third consecutive monthly decline. (CNN Money)

There are signs of a thaw in the US credit crunch, but the availability and cost of credit remains very uneven, according to results of a Federal Reserve survey released Monday. The Fed's April survey of senior loan officers at 79 banks shows a small net fraction of banks eased lending conditions for large and medium-sized business borrowers in 1Q10.

• That was the first time since 2006 that banks have eased business loan standards and terms for two straight quarters. However, the Fed said loan standards "remain quite stringent." (Xinhua)

The US Treasury estimated it will borrow US$340bn of net marketable debt for 2Q10, assuming a US$280bn cash balance on June 30. The cash balance includes US$200bn for the Supplementary Financing Program (SFP). For 3Q10, Treasury estimated it would borrow US$376bn, assuming a US$270bn cash balance on September 30. (Xinhua)

US construction spending unexpectedly rose 0.2% in March (-2.1% in Feb), marking the first advance since Oct 09. Economists surveyed had forecast construction spending falling 0.3%. This was lifted by a rebound in public construction of 2.3%. Private construction was down 0.9%, including a 1.1% drop in residential. (Xinhua)

Europe’s manufacturing industry expanded at the fastest pace in almost four years in Apr 10 as companies increased production to meet export orders. A manufacturing index based on a survey of euro-area purchasing managers increased to 57.6 in Apr 10 (56.6 in Mar), the highest since Jun 06 and above an initial estimate of 57.5 published on April 22. A reading above 50 indicates expansion. (Bloomberg)

Thailand’s inflation slowed in Apr 10, giving the central bank room to keep borrowing costs low to support an economy threatened by political unrest. The consumer price index rose 3% yoy in April after climbing 3.4% in March. The median estimate in a survey was for a 3.2% increase. (Bloomberg)

Indonesia’s inflation stayed below 4% as rice harvests boosted food supplies and a stronger rupiah reduced import costs, giving the central bank room to keep interest rates unchanged this week. The consumer price index rose 3.91% yoy in Apr 10 (3.43% in Mar). That compares with the 3.72% median estimate in a survey. (Bloomberg)

Hong Kong’s retail sales rose for a seventh straight month in Mar 10 after unemployment fell, supporting consumption and economic growth. Sales rose 19% yoy to HK$24.7bn (US$3.18bn), after a 35.8% gain in February. That compares with the median estimate of a 27.5% increase in a survey. (Bloomberg)

European Central Bank President Jean-Claude Trichet, who capitulated on a January pledge not to relax lending rules for the sake of one country, may have to sacrifice more principles to prevent Greece from bringing down the euro.

• Trichet yesterday diluted rules for the second time in a month to guarantee the ECB will keep taking Greek government bonds as collateral for loans. 
• The central bank may have to extend that to other nations, renew a program of lending unlimited cash to banks for a year, and even start buying government debt if the EUR110bn (US$146bn) bailout plan for Greece fails to stem the euro’s slide, economists said. (Bloomberg)

Indonesia’s central bank may keep its benchmark interest rate at a record low this week as a strengthening currency and rising food supplies keep inflation at “moderate” levels. Bank Indonesia will keep its reference rate unchanged at 6.5% for a ninth consecutive month tomorrow, according to all 20 economists in a Bloomberg News survey. The measure is at the lowest level since it was introduced in 2005. (Bloomberg)

The head of the American Chamber of Commerce in China, Christian Murck said the country may allow its currency to appreciate against the dollar during 2H10. (Bloomberg)

Thai Prime Minister Abhisit Vejjajiva proposed holding a 14 Nov election if opposing groups agree to a reconciliation process, a move that may end eight weeks of deadly protests that have shut down Bangkok’s commercial center. (Bloomberg)