20100531 1032 Global Economic News.

US personal spending was flat in April, after six months of increases, while income rose, according to the Commerce Department report. This shows consumers are now taking a step back to moderate their spending and build their savings.

• Individual spending rose less than 0.1% mom in April (0.6% in Mar), coming below market expectations (0.3%). 
• Personal income climbed 0.4% in April (0.4% in Mar). Personal savings as a percentage of disposable personal income, was 3.6% in April (3.1% in March). That's the first increase after three months of declines. (Bloomberg)

The Commerce Department revised US GDP downward to a 3% annual rate in 1Q10 from 3.2% previously. This means the economy grew in the first quarter, but not quite as much as the government originally reported. Meanwhile, the core personal consumption expenditures index, a closely watched inflation gauge that excludes food and energy was also flat. (Bloomberg)

US initial jobless claims fell to 460,000 in the week ended May 22, down 14,000 from an upwardly revised 474,000 the previous week. The number of claims was slightly higher than expected (455,000). The report also said 4,607,000 people continued to file unemployment claims for their second week or more during the week ended May 15, the most recent data available. That's down from an upwardly revised 4,656,000 the week before. (Bloomberg)

Fitch Ratings cut Spain’s credit grade one step from AAA to AA+ and assigned it a “stable” outlook. Spain has held the top rating at Fitch since 2003. Standard & Poor’s lowered Spain’s ratings to AA on April 28. “The process of adjustment to a lower level of private sector and external indebtedness will materially reduce the rate of growth of the Spanish economy over the medium-term,” the statement said. (Bloomberg)

The Thai government has ended the curfew in Bangkok and 23 other provinces. Prime Minister Abhisit Vejjajiva said the decision followed assurances from security forces that they had regained control following recent riots and a deadly crackdown in Bangkok and some other provinces that left 85 dead in the capital. The curfew, which had been in place since May 19, ended at 4am yesterday. (Bangkok Post)

Thailand’s general election is unlikely to be held before the end of the year, Prime Minister Abhisit Vejjajiva said, but added he had not ruled out early elections. "Obviously it's a lot more difficult now to have elections before the end of the year because the November date was set with the (idea of) protesters joining the plan right from the start," the prime minister said.

• Mr Abhisit had proposed November polls in a bid to end two months of crippling protests in Bangkok by the anti-government United Front for Democracy against Dictatorship (UDD), but he shelved the plan because demonstrators did not agree to it and refused to disperse. (Bangkok Post)

The Thai government says a fresh tax incentive is in the pipeline as it wants to rejuvenate the tourism industry which has been devastated by the political unrest. Finance Minister Korn Chatikavanij said he wants income tax rebates for individuals using domestic hotel accommodation as part of measures to revive tourism. (Bangkok Post)

Investors are demanding greater yields to lend to China property firms, a sign they expect borrowers will have a harder time meeting debt payments amid a government clampdown down on lending.

• Yields on the US$3.9bn of bonds issued by Kaisa Group Holdings Ltd., Country Garden Holdings Co. and seven other developers since January widened by an average 2.26 percentage points relative to Treasuries as of last week, more than the 2.05 percentagepoint increase in spreads for the seven dollar-denominated bonds sold by other companies in Asia outside Japan. (Bloomberg)

Australia’s central bank may keep its benchmark interest rate unchanged this week after the most aggressive round of increases in the Group of 20 restrained retail sales and slashed mortgage lending by a quarter. The central bank will leave the overnight cash rate target at 4.5 percent tomorrow, according to all 22 economists surveyed.

• The Reserve Bank of Australia’s decision may be echoed across Asia this week as central banks from Indonesia to Thailand and the Philippines are forecast to hold off on rate increases as they gauge fallout on the global economy from Europe’s debt crisis. (Bloomberg)

South Korea proposed central banks set up a permanent arrangement for foreign currency swaps to help address the type of funding shortages that emerged during the global financial crisis. “Broadening and institutionalization” of such measures could help establish “a global financial safety net,” Bank of Korea Governor Kim Choong Soo said. (Bloomberg)

Japan’s unemployment rate unexpectedly increased in April, household spending fell and deflation deepened, signaling domestic demand is restraining the nation’s recovery from its worst postwar recession. The jobless rate rose to 5.1% from 5%. The median forecast surveyed was for no change. Consumer prices excluding fresh food slid 1.5% yoy after dropping 1.2% in March. (Bloomberg)

Japan’s exports rose 40.4% yoy in April (43.5% in Mar), more than economists estimated (38.3%) in April, the first sign that the nation’s trade-led expansion extended into the second quarter. Imports climbed 24.2% yoy, leaving a trade surplus of JPY742.3bn. That’s about 15 times bigger than the JPY49bn surplus posted in Apr 09, when Japan was beginning to emerge from its worst postwar recession. (Bloomberg)

South Korea’s current-account surplus narrowed from US$1.8bn to US$1.5bn in April as the nation’s companies paid more of their dividends to international investors. Dividend payments to foreign shareholders amounted to US$2.3bn in April. “The current-account surplus will likely rise to US$2.5bn in May, the biggest so far this year,” Lee Young Bog, a Bank of Korea official said. He added that there is “no sign” that the European debt crisis is affecting the nation’s “export and capital flows.” (Bloomberg)

Hong Kong’s exports rose 21.7% yoy to HK$242.2bn in April (32.1% in Mar), marking the sixth month increase and buoyed by demand from China, the world’s fastest-growing major economy. That was more than the 19.3% median estimate. Imports rose a more-thanestimated 28.8% in April, leaving a trade deficit of HK$35.2bn. (Bloomberg)

The members of Thai parliament late Thursday night voted 250 to 172 to approved the first reading of the THB2.07tr (about US$63.61bn) 2011 draft fiscal budget bill. According to Bangkok Post online, the House meeting also agreed to set up a 63-member panel to consider details of the draft budget bill and submit to the House meeting for the second reading within 30 days. The ad hoc panel will convene its first meeting at 4:00pm on Tuesday. (Bloomberg)


Thailand’s foreign-exchange reserves fell 0.7% to US$143.9bn in the week ended 21 May, from US$145.0bn a week earlier. The central bank’s holdings of forward contracts rose 11.6% to US$13.2bn in the same week, from US$11.8bn a week earlier. (Bloomberg)

Philippine economic growth accelerated more than forecast in the first quarter, putting pressure on the central bank to raise interest rates even amid concern the European debt crisis will derail the global recovery. Gross domestic product increased 7.3% yoy in 1Q (2.1% in 4Q09). That’s the fastest pace since 2Q07, and beats the 4.4% median forecast. (Bloomberg)

India’s food inflation slowed from 16.5% yoy to 16.2% yoy in the week ended 15 May. This marked the first time ease in three weeks as Prime Minister Manmohan Singh pledged to drive down prices. (Blooomberg)