20101005 0934 Global Economics News.

Japan: Wages fail to rise for first time in six months
Japan’s wages unexpectedly stagnated in August, failing to rise for the first time in six months, adding to concern the country’s consumers won’t be able to drive growth in place of slowing demand abroad. Monthly wages including overtime and bonuses were unchanged from a year earlier at JPY 274,232 (USD 3,288), the Labor Ministry said. Barclays Capital had projected a 0.6% annual advance in pay, while Bank of America Merrill Lynch had forecast a 1% gain. (Bloomberg)

EU: European producer-price inflation slows on Euro gain
European producer-price inflation slowed in August as a stronger euro helped offset higher costs for energy as the economy cooled. Factory-gate prices in the 16-nation euro region rose 3.6% from a year earlier after increasing 4% in July. That’s in line with the median estimate of 18 economists in a Bloomberg News survey. Prices advanced 0.1% from July, when they increased 0.2%. The euro has strengthened 9.5% against the dollar over the past three months, making imports such as crude oil more affordable just as the euro-area recovery weakens. (Bloomberg)

EU: ECB steps up bond purchases, buys the most in over three months
The European Central Bank stepped up its government bond purchases last week, buying the most in more than three months to calm bond markets. The central bank said it bought EUR 1.38 bn (USD 1.9 bn) of bonds last week, up from EUR 134 m the previous week. The ECB will take term deposits tomorrow to mop up EUR 63.5 bn of liquidity created by bond purchases settled up to last week. The ECB began the bond-purchase program on May 10 to stabilize markets rocked by Greece’s fiscal crisis. (Bloomberg)

Australia: Service industry shrinks at fastest pace in 14 months
Australia’s services industry contracted last month at the fastest pace in more than a year as demand weakened for communications and financial products. The performance of services index fell 1.9 points to 45.6 in September, the lowest level since July 2009, suggesting that the central bank’s six interest- rate increases from Oct 2009 to May are cooling domestic demand even as a record mining investment boom drives down unemployment. A figure below 50 indicates the industry is contracting. Australia will decide today whether higher interest rates are needed. (Bloomberg)

US: Goods orders and pending home sales rise
Orders for US capital goods rebounded in August and pending sales of existing homes climbed for a second month, showing the recovery is stabilizing after a second-quarter slowdown. Bookings for non-military capital goods excluding planes increased 5.1%, the biggest gain since March. The number of contracts to buy previously owned houses rose 4.3%, topping the median forecast of economists surveyed by Bloomberg News. Home sales are steadying after plunging in the months following the expiration of a housing tax credit, while the need to update equipment and growing demand from overseas will help manufacturing hold up. (Bloomberg)