20120816 1003 Local & Global Economy Related News....

Malaysia: GDP grew 5.4% in 2Q while July’s inflation was up 1.4%
Malaysia's economy grew at an annual pace of 5.4% in 2Q12 as sturdy domestic demand and strong government spending helped offset weaknesses in exports due to faltering global demand. Meanwhile, the CPI for July was 1.4% higher than a year earlier. The central bank kept its official GDP target for 2012 at between 4% and 5%, but said growth is likely to be at the upper end of the range. (Reuters)

Economy: Malaysia's 2Q 2012 balance of payments records lower surplus of RM9.6bn
Malaysia's current account balance for 2Q 2012 showed a lower surplus of RM9.6bn, down from RM18.1bn attained a quarter ago, the Statistics Department said. It said performance for the quarter reviewed was weighed down by lower surplus recorded in goods account, which declined by RM6.4bn to RM29.4bn, and an increase of income account, which was RM3.1bn higher to RM11.7bn in. Y-o-Y the surplus on current account was reduced by RM13.4bn from RM23bn a year ago. (Bernama)

China: Can meet growth target on positive signs, Wen says
Chinese Premier Wen Jiabao said easing inflation allows more room to adjust monetary policy as positive signs are emerging in the economy, expressing confidence after July’s data showed a further slowdown in growth.
“We have the conditions and capabilities, and will be sure to fulfill this year’s economic and social development targets,” Wen said. (Bloomberg)

China: Soured loans rise for 3Q 2012 as economy slows
Chinese banks’ bad loans increased for a third straight quarter, the longest streak of deterioration in 8 years, highlighting pressures on asset quality and profit growth as the economy weakens.  Non-performing loans rose by 18.2bn yuan  (US$2.86bn) in the three months ended June 30 to 456.4bn yuan, the China Banking Regulatory Commission said in a statement on its website on Wednesday. Bad loans surged at all types of banking institutions, including the largest state-owned lenders, rural  banks and foreign banks, the regulator said. (Bloomberg)

China: Reluctance on reserve cut signals inflation concern
China’s slower-than-forecast cuts in banks’ reserve requirements show authorities are reluctant to shake their concern inflation will quicken, 3 months after Premier Wen Jiabao shifted priorities to boosting growth. China has left the reserve ratio for the biggest banks at 20% since mid-May while lowering interest rates in June and July, bucking forecasts from HSBC Holdings Plc and Societe Generale SA that the government would build on  3 ratio reductions since Nov 30. Industrial-production and loan data for July that missed estimates last week fuelled further speculation the People’s Bank of China would cut the ratio as soon as Aug 10. (Bloomberg)

UK: Unemployment unexpectedly falls on Olympics boost
UK jobless claims unexpectedly fell in July and a wider measure of unemployment dropped to its lowest in a year as the Olympic Games created jobs, showing the labor market’s resilience in the face of deepening recession. Jobless-benefit claims fell 5,900 to 1.59m, the Office for National Statistics said on Wednesday in London. The median forecast of 29 economists in a Bloomberg News Survey was for a gain of 6,000. The jobless total measured by International Labor Organization methods fell to 8% in the second quarter from 8.1% in the three months through May. (Bloomberg)

UK: BOE drops reference to rate cut as it considers policy options
Bank of England policy makers dropped a reference to interest-rate cuts this month as they voted to keep their bond-purchase target unchanged and said they will assess the need for other stimulus measures. The Monetary Policy Committee voted 9-0 to hold the target at 375bn pounds (US$587bn), according to the minutes of the Aug. 1-2 meeting, published in London on Wednesday. It also voted 9-0 to keep the benchmark interest rate at a record-low 0.5%. (Bloomberg)

Spain: Said to accelerate EU bank bailout after collateral limits
Spain is about to receive an emergency disbursement from the 100bn-euro (US$123bn) bailout of its financial system because of restrictions the ECB imposed on bank borrowing, according to a person familiar with the matter. The ECB last month imposed limits on how much it will lend banks against government-guaranteed bonds. The rule change meant Spain had to ditch a plan for nationalized lender Bankia group to get a loan from the Frankfurtbased central bank, said the person, who asked not to be named because the matter is private. (Bloomberg)

US: Factory output climbs as prices remain tame
Manufacturers are turning out more cars and computers, homebuilders are gaining confidence and prices are little changed, showing the US economy is expanding with inflation contained. Production at factories, mines and utilities increased 0.6% in July following a 0.1% gain the prior month, Federal Reserve data showed today in Washington. The cost of living over the past 12 months rose at the slowest pace in almost two years and sentiment among residential construction companies climbed to a 5-year high, according to other data. (Bloomberg)

US: Homebuilder confidence increases to 5-year high
Confidence among US homebuilders climbed in August to the highest level in more than five years, affirming the improvement in residential construction. The National Association of Home Builders/Wells Fargo builder confidence index rose to 37, higher than projected and the best showing since February 2007, according to figures from the Washington-based group released on Wednesday. The median forecast in a Bloomberg survey of economists called for no change from July’s 35. Readings below 50 mean more respondents said conditions were poor. (Bloomberg)

US: July consumer prices unchanged pricing power wanes
The cost of living in the US was little changed in July for a second month, showing companies lack pricing power. The unexpected reading in the consumer-price index capped a 1.4% gain over the past 12 months, the smallest year-to- year increase since November 2010, the Labor Department reported today in Washington. The median forecast of 85 economists surveyed by Bloomberg News called for an increase of 0.2%. The core index, which excludes volatile food and fuel costs, rose less than forecast. (Bloomberg)

US: International demand for assets falls from previous month
International demand for US financial assets fell in June from the previous month’s inflows, as investors saw Europe’s leaders moving toward a resolution of their financial crisis. Net buying of long-term equities, notes and bonds totalled US$9.3bn during the month, a drop from net purchases of US$55.9bn in May, the Treasury Department said on Wednesday in Washington. Economists surveyed by Bloomberg News projected net buying of US$40bn of long-term assets, according to the median estimate. (Bloomberg)