The government and Bank Negara Malaysia (BNM) will do everything, within their powers, to create a conducive environment for financial sector growth, said PM Datuk Seri Najib Tun Razak. "I want Malaysian banks to be out there exploring potential, finding new markets and new areas of growth," he said. The financial sector was resilient, dynamic, competitive and strong, and had grown significantly to become a major contributor to the country's GDP, he added. (Bernama)
The demand for Malaysian products by China is still strong despite the increasing inflation rate China, said Deputy Finance Minister Datuk Donald Lim Siang Chai. Demand for conventional Malaysian products such as Liquefied Natural Gas (LNG), palm oil, timber, electric and electronic products and rubber was still high, he noted. It is driven by demand from the local industries. "This year, we expect China-Malaysia’s total trade to grow at a rate of close to 20%,” he added. "At the moment, there are no signs of decreasing imports from Malaysia to China," he said. (Bernama)
US: Retail sales stall on lack of job growth
Retail sales in the US unexpectedly stagnated in August as a lack of employment and limited income growth restrained demand, highlighting the risk the economy will stall. The unchanged reading followed a 0.3% gain for July that was smaller than previously estimated, Commerce Department figures showed. Prices paid by producers were also unchanged in August, according to the Labor Department, while so-called core costs that exclude food and fuel rose less than forecast. Retailers like Best Buy Co. and Target Corp. are saying a struggling job market that has battered consumer confidence is hurting sales. The dim outlook for household spending, which accounts for about 70% of the economy, will make it harder for the two-year old recovery to gain speed, giving the Federal Reserve reason to take additional steps to spur growth. (Bloomberg)
US stocks rally as Germany, France express support for Greece
US stocks rose, sending the S&P 500 Index higher for a third day, as French President Nicolas Sarkozy and German Chancellor Angela Merkel said they are convinced Greece will remain in the euro zone. The S&P 500 gained 1.4% to 1,188.68, rallying 3% in three days and erasing its drop on 9 Sept, which had been driven by speculation Greece could default. The Dow Jones Industrial Average rose 140.88 pts, or 1.3%, to 11,246.73. German Chancellor Merkel is convinced the future of Greece is inside the euro area, following a telephone conversation with Prime Minister George Papandreou and French President Sarkozy. (Bloomberg)
The U.S. government’s budget deficit widened to US$134.2bn in Aug 11 (US$90.5bn in Aug 10), according to the Treasury Department’s monthly budget statement. For the fiscal year to date, the deficit increased to US$1.23tr, less than at the same point in 2010. The Congressional Budget Office projected a shortfall of US$132bn in Aug 11. (Bloomberg)
U.S. mortgage applications increased 6.3% from one week earlier, according to data from the Mortgage Bankers Association’s survey for the week ended 9 Sep. Refinancing was up 6%, while purchasing was up 7%. MBA said rates on 30-year fixed-rate mortgages averaged 4.17%, down from 4.23%. (Wall Street Journal)
U.S. wholesale prices were little changed in Aug as costs decreased for energy and automobiles. The producer price index was unchanged in Aug (+0.2% in Jul), Labor Department figures showed. Economists projected no change. (Bloomberg)
U.S. business inventories rose slightly less than expected in Jul, suggesting firms remained cautious about future demand at the start of 3Q. Inventories climbed 0.4% in Jul (+0.4% in Jun), the Commerce Department said. Economists had expected a rise of 0.5% in Jul. (Bloomberg)
A majority of Americans don’t believe President Barack Obama’s US$447bn jobs plan will help lower the unemployment rate. The downbeat assessment of the American Jobs Act reflects a growing and broad sense of dissatisfaction with the president. Americans disapprove of his handling of the economy by 62% to 33%, a poll conducted 9-12 Sep shows. (Bloomberg)
U.S. Treasury Secretary Timothy F. Geithner will urge European governments to step up their crisis- fighting efforts amid Obama administration concerns that the region’s woes may hurt the U.S. economy. Geithner will press European Union finance ministers when he meets with them this week, a euroarea official said. The official spoke on condition of anonymity because preparations for the meeting are confidential. (Bloomberg)
Japan's industrial output rose 0.4% in Jul (3.8% in Jun), revised data showed, confirming that the recovery from the Mar earthquake is losing steam as a surging yen and slowing global demand cloud the outlook. (Reuters)
Japan: S&P cuts growth forecast to near zero after quake
Standard & Poor’s cut its forecast for Japan’s economic growth and said the rebound from the 11 March earthquake is likely to be “less robust” than expected. Expansion in gross domestic product this year will be close to zero, compared with a pre-quake estimate of 1.3%, the ratings company said. Recent data suggest the rebound from the disaster has been weakening, with industrial production growth slowing and retail sales dropping. The government has been slow in responding to the crisis, which also spurred a nuclear accident that has curbed the nation’s electricity supply, the ratings company said. (Bloomberg)
UK: Public jobs fall by record as government cuts spending
UK public-sector employment fell by a record in the second quarter, offsetting a gain in hiring by companies, as the government cuts spending to reduce the budget deficit. Public-sector payrolls plunged 111,000 in the three months through June, while private-sector employment rose 41,000, the Office for National Statistics said today in London. In August, jobless-benefit claims increased 20,300. While that was less than the 35,000 median forecast of 23 economists in a Bloomberg News Survey, it’s a sixth straight increase and pushes the claims total to the highest since January 2010. (Bloomberg)
Eurozone industrial production rebounded in Jul, driven by a surge in Germany, the currency area's manufacturing powerhouse. The Eurostat said industrial production rose by 1% mom in Jul (-0.8% in Jun). On a yoy basis, industrial production rose 4.2% (+2.6% in Jun). Economists estimated that output rose 1.5% mom and 4.7% yoy in Jul. (Wall Street Journal)
European banks are losing deposits as savers and money funds spooked by the region’s debt crisis search for havens, a trend that could worsen economic and financial conditions. Retail and institutional deposits at Greek banks fell 19% in the past year and almost 40% at Irish lenders in 18 months. Meanwhile, European Union financial firms are lending less to one another and U.S. money-market funds have reduced their investments in German, French and Spanish banks. (Bloomberg)
European policy makers are not living up to their commitment to the euro as the region’s debt crisis threatens to spread, World Bank President Robert Zoellick said. “It is not responsible for the eurozone to pledge fealty to a monetary union without facing up to either a fiscal union that would make monetary union workable or accepting the consequences for uncompetitive, debt-burdened members,” Zoellick said. “We must all be responsible stakeholders now,” he said. (Bloomberg)
The European Central Bank said it will lend dollars to two euroarea banks, a sign they are finding it difficult to borrow the U.S. currency in markets. The ECB allotted US$575m in a regular seven-day liquidity-providing operation at a fixed rate of 1.1%. It’s the first time since 17 Aug that a lender requested dollars from the ECB. (Bloomberg)
The ADB revised down its growth forecast for the region to 7.5% for the year (7.8% previously). That cut was prompted by worsening economic conditions in developed nations that are weighing on export-focused Asian economies. But private consumption will cushion Asian economies from the worst of the global slowdown. (Wall Street Journal)
Bank Indonesia intervened to curb losses in the rupiah, while traders said authorities in India and South Korea also sold dollars, a sign Europe’s debt crisis is undermining confidence in Asian emerging markets. (Bloomberg)
Indonesia’s central bank signalled it may join Brazil and Turkey among emerging markets cutting interest rates as Europe’s debt crisis threatens Southeast Asia’s biggest economy. (Bloomberg)
India’s inflation accelerated to the highest level in more than a year, maintaining pressure for further interest-rate increases even as economic growth slows. The benchmark wholesale-price index rose 9.78% yoy in Aug after a 9.22% jump in Jul. Economists had forecast a 9.64% gain. (Bloomberg)
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