US durable goods orders surged 2.9% mom in April (-1.3% in Mar), beating market consensus for a 1.5% rise. Excluding the transportation component, new durables orders slipped 1.0% after a 4.8% spike in March. The jump in the headline number was led by huge 16.1% boost in the transportation component (-13.1% in Mar). (Bloomberg)
US new home sales surged 14.8% to a 504,000 annual rate in April (411 units in Mar), coming in above market expectations for only 425,000. The surge made for the biggest drop ever in supply, down 7.0% for the lowest level, at 211,000, in nearly 42 years. Supply at the current sales rate fell to 5.0 months vs. 6.2 months in March.
- April's end to second-round stimulus was supposed to have depressed new home sales which are measured by contract signings, not by actual closings which had to make the April 30 deadline to qualify for tax credits. (Bloomberg)
The Organization for Economic Cooperation and Development (OECD) raised its growth forecasts for this year and next year as emerging economies outpace debtburdened developed countries to drive the global expansion. The economy of the OECD’s 30 members will grow 2.7% this year, more than the 1.9% predicted in November.
- The global economy will expand 4.6% this year and 4.5% in 2011. While the economies of China and India risk overheating, indebtedness may threaten expansion in the developed world.
- The US economy will grow 3.2% in 2010 and next year instead of the 2.5% predicted in November. The Eurozone will advance 1.2% (0.9% previously) and Japan’s economy will expand 3% this year (1.8% previously).
- China will expand more than 11% this year, India (8.3%) and Brazil (6.5%). While India will grow 8.5% next year, China and Brazil’s expansion will slow to 9.7% and 5% respectively as monetary policy is tightened to prevent asset bubbles and to keep inflation in check. (Bloomberg)
- “The euro’s fluctuation will have an impact on China’s thinking, but it’s only one element” in any decision to allow the yuan to appreciate", he said. “It has to be reviewed in the context of China’s growth. We cannot afford to see China’s economy slowing down because of a move on the currency front.” (Bloomberg)
- Mundell predicted debt restructuring for “one or two” euro nations within five years. Hanke of Johns Hopkins University said Greece’s “death spiral” will end in default if debt obligations can’t be renegotiated. (Bloomberg)
Thailand’s exports rose for the sixth consecutive month in April on overseas demand for electronics and automobiles, helping to sustain an economy hurt by the nation’s worst political violence in 18 years. Shipments jumped 35.2% yoy in April (40.9% in Mar) to US$14.1bn. The median estimate in a survey was for a 37.5% gain. (Bloomberg)
Singapore’s industrial production grew at a faster pace than economists estimated, spurred by a surge in the electronics and pharmaceuticals industries. Output at factories, which accounts for about a quarter of the economy, surged 51% yoy in April (+46.6% in Mar). That’s the fifth straight month of growth. The median estimate surveyed was for a 20.7% gain. (Bloomberg)
European Union regulators have refused to follow Germany’s unilateral ban on naked short-selling of sovereign debt securities and some financial shares, said Eddy Wymeersch, chairman of the Committee of European Securities Regulators. “An EU ban isn’t on the cards and it isn’t off the Cards. Regulators have not made up their minds, but there’s certainly not a unanimous move to follow the German route,” he said. (Bloomberg)
Prime Minister Silvio Berlusconi’s government approved EUR24bn (US$30bn) of budget cuts over the next two years as part of a European effort to convince investors that euro nations can trim deficits and defend the single currency. The measures include a three-year wage freeze for civil servants and a crackdown on tax evasion. The Italian measures, worth 1.6% of GDP, aim to bring the deficit within the EU limit of 3.0% of GDP in 2012 from 5.3% in 2009. (Bloomberg)
The Bank of England should start raising interest rates and scaling back its asset purchases no later than the end of this year as inflation pressures mount, the Organization for Economic Cooperation and Development said. “The authorities face the challenge of preserving credibility, with headline inflation and some measures of inflation expectations exceeding the targeted rate. Fiscal policy will be a “drag” on UK growth from this year,” it said. (Bloomberg)
South Korea reported a current-account surplus in April for a third month as a recovering global economy spurred demand for cars and semiconductors. The surplus narrowed to US$1.49bn from a revised US$1.8bn in March. (Bloomberg)
The two-day China-US Strategic and Economic Dialogue ended on 25 May with the signing of 26 agreements and both countries agreeing to deepen cooperation to strengthen and reinforce the global economic recovery. Consensus was reached in many issues involving financial, currency structure reforms, trade and investment and the stability and reform of the financial market. They also agreed to enhance dialogue and coordination in macroeconomic policies. (Bernama)
Thailand’s government plans to spend about a third of its THB2.07tr (US$63.6bn) budget next year on measures to narrow a divide between rich and poor that fueled deadly street protests in Bangkok this month. “The budget is a mechanism to expand the country’s economy and reduce income gaps in society,” Prime Minister Abhisit Vejjajiva said.
- The plan to increase spending by 22.0% will widen the budget deficit to THB420bn in the fiscal year starting October, Abhisit said. The government targets revenue of THB1.65tr in fiscal 2011.
- Of the total budget, THB624.4bn will be used to help reduce inequality, alleviate poverty and improve education and health care. A further THB220bn will be spent on economic development. (Bloomberg)
Bank of Thailand Governor Tarisa Watanagase said political unrest will have a significant impact on the nation’s economy in 2Q10, especially on tourism, investment and consumption. But, the country still have exports as a positive factor” for the economy. “The risk premium for Thailand has increased because of the unrest. We will have to see whether we will be downgraded. If that happens, the cost of funding will be affected,” she said. (Bloomberg)
Vietnam’s central bank is working on regulations that will help improve the competitiveness, efficiency and safety of the nation’s lenders and other financial institutions, Deputy Governor Nguyen Dong Tien said. The regulations are being reviewed by the National Assembly, he added. (Bloomberg)
The Philippine central bank said it will consider the European debt crisis and escalating tension on the Korean peninsula at its next policy meeting, suggesting it may refrain from raising interest rates in June. “We are watchful of developments in the other markets, particularly shifts in investor sentiment and their impact on the movements of international commodity prices and exchange rates,” Governor Amando Tetangco said. (Bloomberg)
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