South Korea’s unemployment rose to a four-month high last month as weakness in the global economy pared export demand. The jobless rate was 3.2%, Statistics Korea said. The Bank of Korea held off raising benchmark interest rates last week for an eighth month, the longest pause since tightening began in July 2010. External uncertainty, weak consumer and business sentiment, and high household debt are weighing on growth and downside risks are greater than upside risks, the central bank said. (Bloomberg)
Japan: Bank of Japan boosts easing with 1% goal for inflation
Japan’s central bank unexpectedly added JPY10trn (USD128bn) to an asset-purchase programme and set an inflation goal after an economic slide fueled criticism it has been slower to act than counterparts. An asset fund increased to JPY30trn, with a credit lending programme staying at JPY35trn, the Bank of Japan said. The BOJ also said that it will target 1% inflation “for the time being.” Stocks rose and the yen weakened against the dollar as the central bank expanded stimulus for the first time since October to revive an economy that shrank an annualized 2.3% last quarter. Lawmakers had urged extra efforts to counter deflation after the Federal Reserve adopted a 2% inflation target and the European Central Bank expanded its balance sheet. (Bloomberg)
Japan's industrial production rose 3.8% mom in Dec compared with an initial reading of 4%. The capacity utilisation index rose 3.1% mom in Dec to 89.4 (from an initial reading of -2.9%). (Reuters, Bloomberg)
Chinese Premier Wen Jiabao said China was ready to increase its participation in efforts to resolve Europe's debt crisis, after holding talks with EU leaders in Beijing. China was considering using Europe's bail-out funds to help address the continent's fiscal woes, Wen added, without elaborating further on how the Asian power might be prepared to contribute. (AFP)
China: Export gauges signal slower yuan gains
China’s exporters face an “extremely tough” first half of 2012, as weak demand and rising labour costs may lead the government to slow gains in the yuan. Chart of the Day shows the y-o-y percentage change in China’s monthly exports against a gauge of new export orders from the official monthly purchasing managers’ index. The measure of orders was less than 50, a reading that indicates contraction, for four straight months through January, the longest streak since the midst of the global economic crisis beginning in 2008. The lower panel tracks the nation’s trade balance and yuan-dollar rate, with the Chinese currency little changed this year (Bloomberg)
India’s wholesale price index rose 6.55% yoy in Jan (7.47% in Dec), broadly in line with the 6.6% average forecast. (Reuters)
The finance ministry cut its estimate of Indonesia’s GDP growth to a range of 6.5 to 6.6% from the forecast of 6.7% that it set in the state budget in Oct. (Jakarta Globe)
Thailand’s government revenue in Jan missed the target by THB4.8bn, coming in at THB126.39bn. The diesel-tax exemption contributed to the shortfall, since the government previously had planned to resume a THB5-per-litre rate last month. The Thai government will likely extend the de facto exemption of diesel from excise tax for another month
In Singapore, the median monthly household income rose from S$6,340 in 2010 to S$7,040 in 2011, an increase of 11%. After adjusting for inflation, the increase was 5.6%, double the 2.8% real growth in 2010. (ST)
Italian and Spanish borrowing costs plunged to the lowest in at least 11 months at debt sales as investors ignored downgrades by Moody’s Investors Service. Italy sold €6bn (US$7.9bn) of bonds, meeting its target as its three-year borrowing costs fell to 3.41%, the lowest since March, whilst Spain sold 12-month bills at an average rate of 1.899%, the least since Oct 2010, according to data compiled by Bloomberg. (Bloomberg)
EU: Industrial output declines 1.1%, led by German slump
European industrial production declined in December led by a slump in Germany, adding to signs the region may have slipped into its second recession in three years. Production in the 17-nation euro area fell 1.1% from November, when it remained unchanged, the European Union’s statistics office in Luxembourg said. Production decreased 2% y-o-y. The region’s economy probably failed to grow in the fourth quarter as governments toughened austerity measures, undermining spending and hiring, just as global exports weakened. While industrial orders dropped in November and unemployment held at the highest in more than a decade in December, European Central Bank President Mario Draghi said on 9 Feb that he sees “tentative signs” of economic stabilization. (Bloomberg)
UK: Inflation drops to lowest since November 2010
British inflation dropped sharply in January as the effect of a rise in 2011 sales tax fell away, supporting the Bank of England (BoE) forecasts for a sharp easing of price pressures this year and providing some relief for cash-strapped consumers. The decline to 3.6% its lowest annual rate since Nov 2010 will reassure the BoE as it prepares to publish an update to its quarterly economic forecast today. (Financial Daily)
US: Obama aims USD1.4trn tax increase at highest earners
President Barack Obama called for USD1.4trn in fresh revenue from Americans at the top of the income scale, proposing higher taxes on wages and investments and limiting breaks for retirement savings and health insurance. The tax proposals in the administration’s fiscal 2013 budget plan, released yesterday, were immediately rejected by business groups and congressional Republicans, who said the ideas are part of Obama’s re-election strategy and gave them little chance of advancing into law in 2012. (Bloomberg)
US Treasury Secretary Timothy Geithner urged Congress to do more to help the nation's ranks of unemployed, saying that the government has “an obligation to them” as "while the economy is gaining strength, we still face significant economic challenges.” He also said that the corporate tax reform plan will end "dozens and dozens" of tax breaks, as he defended the White House's election-year call for higher taxes on the wealthy. (AFP, Reuters)
US retail sales grew 0.4% mom in Jan (0.0% in Dec), less than economists’ forecast of a 0.8% gain. (Bloomberg)
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