20120910 1014 Global Economy Related News.

Exports  contracted by 1.9% yoy in July (+5.4% in Jun) while  imports increased 9.5% yoy (+3.6% in Jun), leaving a  trade surplus of RM3.6bn (+RM9.2bn in Jun). Economists had projected exports and imports would increase by 3.3% and 5.4% respectively.  The International Trade and Industry Ministry said the decline in exports were due to the slower economic activities in China, South Korea, India and the European Union.  It also disappointed on weak demand for the electrical and electronic products as well as palm oil and crude rubber. (BT)

The  international reserves  of Bank Negara Malaysia (BNM) amounted to RM431.1bn (US$134.9bn) as at 30 Aug 2012, up from RM430.5bn (US$134.7bn) as at 15 Aug 2012. The reserves position is sufficient to finance 9.5 months of retained imports and is 3.9 times the short-term external debt. (BNM)

Malaysia and the US are hoping to see a conclusion to the Trans-Pacific Partnership (TPP) multilateral trade negotiations  by end-2013, PM Datuk Seri Najib Tun Razak said on Sunday. There were several issues yet to be satisfied and both governments are hoping that resolutions would be found for the outstanding issues by then, he said. (Bernama)

Allocations for almost all ministries will be increased under Budget 2013 to be tabled in Parliament on 28 Sep,  Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said Saturday. He said the Cabinet approved the draft Budget 2013 which was tabled for the ministers' perusal at the weekly cabinet meeting on Wednesday. "We engaged the World Bank and under the Strategic Reform Initiative, we went through one by one the ministries' expenditures. So, basically all the ministries will get more allocations and only one or two will get less based on the rationalisation initiative," he said. The budget aims to ensure that there is an operating surplus, the fiscal deficit is reduced and the debt-to-GDP ratio is maintained at below 55%, he said. On income tax rate, he said: “As far as I know, the government does not intend to increase the tax rate.” (Bernama, The Star)

The federal government is confident of channeling more vessel repair jobs to Labuan now as the outlook of the oil and gas (O&G) sector in the island has improved. Defence Minister, Datuk Seri Zahid Hamidi said Labuan Shipyard Engineering Sdn Bhd (LSE), one of Asia's largest shipyard involved in vessel repairs and fabrication, has proven its capability to complete the various projects given. "I have given my assurance to send more vessels to LSE with the condition that 30% of the jobs be shared among local companies,” he said. (Bernama)

Japan’s index of leading economic indicators fell to a seasonally adjusted 91.8 in Jul, from 93.2 in the preceding month whose figure was revised up from 92.6. Economists were looking for a decline to 91.6.  The  coincident index dropped to 92.8 in Jul from 94.1 in Jun. (RTTNews)

Asia-Pacific Economic Cooperation leaders in a joint statement after the Summit in Vladivostok said,  “High public deficits and debts in some advanced economies are creating strong headwinds to economic recovery globally. The events in Europe are adversely affecting growth in the region. In such circumstances, we are resolved to work collectively to support growth and foster financial stability, and restore confidence.” (Bloomberg)

China will widen the  yuan's trading band at some point,  Guo Jianwei, deputy director of the People's Bank of China's second monetary policy department, said whilst declining to give a timetable for any move. (Bloomberg)

China’s industrial production increased 8.9% yoy in Aug, the slowest pace in three years. That compared with the 9% median estimate of economists and a 9.2% pace in Jul. (Bloomberg)

China’s urban fixed-asset investment growth in the first eight months eased to 20.2% yoy (20.4% in Jul). (Bloomberg)

The  Chinese government has approved plans for new roads, railways and urban infrastructure is estimated to have a combined value of about Rmb1tr (US$158bn). (Bloomberg)

China’s consumer prices  rose 2.0% yoy in Aug (1.8% in Jul) amid higher costs for food. Producer prices fell 3.5% yoy in Aug (-2.9% in Jul), more than the 3.2% that economists had forecast. (AFP)

China’s retail sales rose 13.2% yoy in Aug, a touch higher than 13.1% in Jul, and in line with the median estimate. (Bloomberg)

In China, the value of land purchased by developers rose 66% yoy in Aug after falling 39% in Jul. Investment in new projects gained 33% after a 25% increase the previous month. (Bloomberg)

Following an inspection in 16 provinces to check on the implementation of its property curbs, speculation has arisen that  China may set  new property controls as early as this month. (Beijing Review)

France's Socialist President Francois Hollande pledged €30bn in new taxes and savings to balance the budget and fund a turnaround in two years, whilst  Germany's finance minister Wolfgang Schaeuble warned that debt-laden eurozone states must stick to  promised reforms and cuts despite last week's offer of help from the ECB that calmed markets. (AFP)

Indonesia’s foreign reserves rose to US$108.99bn in Aug (US$106.56bn in Jul). (Bloomberg)

Indonesia’s government estimates that there will be an additional budget expenditure of Rp12tr (US$1.26bn) due to a shift in macroeconomic assumptions in the revised state budget. (IFT)

The Philippines’ foreign reserves rose to US$80.8bn in Aug (US$79.8bn in Jul). (Bloomberg)

Thailand’s foreign reserves for the week ended 31 Aug rose to US$179.2bn from US$178bn the previous week. (Bloomberg)

Singapore’s foreign reserves rose to US$246.1bn in Aug (US$244.1bn in Jul). (Bloomberg)

Deputy Governor of the State Bank of Vietnam Le Minh Hung asserted that the  IMF  and the  Vietnamese Government have never discussed, nor intend to discuss access to the  IMF's credit to deal with the nation’s  bad debts. (Vietnam News)

Vietnamese rice exports totalled more than 928,000 tonnes in Aug, a 33% yoy and 22% mom  surge, to bring the free-on-board export value to nearly US$399m, up 23% mom and 18% yoy. (Vietnam News)

Myanmar's parliament has approved a new draft foreign investment law aimed at opening the country up to capital and job creation.  The final draft dropped a controversial clause requiring foreign investors to invest a minimum of US$5m.  It also increases the maximum foreign shareholding in 13 sectors considered sensitive, including manufacturing, farming, agriculture and fisheries, to 50% from 49% proposed earlier.  The new law allows foreign investors to lease land for an initial period of 50 years with an option to renew, compared to 35 years under old rules. (Bangkok Post)


China: Slowing industrial output signals more stimulus before power shift
China’s industrial output grew at the slowest pace in three years and President Hu Jintao said economic expansion faces “notable downward pressure.” Production increased 8.9% in August y-o-y and fixed-asset investment growth in the first eight months eased to 20.2%. Inflation accelerated for the first time in five months to 2% y-o-y. However, the decline in producer prices extended into the sixth month, with a drop of 3.5%. (Bloomberg)

South Korea: Producer-price inflation of 0.3% shows rate cut room
South Korea’s producer prices returned to inflation in August after a dip into deflation in the previous month. Prices rose 0.3% y-o-y, after a 0.1% decline in July. The gain was 0.7% m-o-m. Producer-price inflation has moderated this year from levels as high as 7% during 2011, highlighting room for cutting benchmark interest rates to support growth. Twelve economists in a Bloomberg News survey all forecast that the Bank of Korea will make a reduction at its next meeting on 13 Sept. (Bloomberg)

UK: Business confidence fell to record low in August
UK business confidence fell to a record low last month and a gauge of output indicated that the economy is set to remain weak, according to BDO LLP. The sentiment gauge fell to 89.1 from 93.1 in July, the lowest since the series began in 1992. The output measure dropped to 90.8 from 93.9, further below the 95 mark that points to positive growth one quarter ahead. BDO said the decline suggests growth “is likely to remain elusive in the final quarter.” (Bloomberg)

UK: Surveys show employment prospects brighten
A survey by Lloyds Bank showed Britons’ assessment of employment prospects rose to minus 43 last month from minus 51 in July. Lloyds’ index of consumers’ job security increased 5 points to minus 14. In another report, KPMG LLP and the Recruitment and Employment Confederation said their index of hiring of full-time staff rose to 48.4 in August from 47.3 in July. Readings below 50 indicate contraction. (Bloomberg)

US: Hiring weakens in August, jobless rate drops
Job growth slowed sharply in August with the data reinforcing concern about the weak labour market and triggering speculation that the Federal Reserve may take aggressive action in a bid to underpin the US economy. Nonfarm payrolls grew by a seasonally adjusted 96,000 in August, well shy of estimates and down from 141,000 jobs added in July. Meanwhile, the nation’s unemployment rate fell to a seasonally adjusted 8.1%, down from 8.3% in July, because it reflected 368,000 people dropping out of the labour force. While unemployment dropped by 250,000 to 12.5m for August, employment also fell, dipping 119,000 to 142.1m. (Market Watch)


US tax increases and spending cuts set to take effect by the beginning of next year pose one of the biggest risks to the global economy, IMF Managing Director Christine Lagarde  said, with the other two being the euro crisis and medium-term public financing. (Bloomberg)

US non-farm payrolls  in Aug advanced 96,000 following revised gains of 141,000 in Jul. Economists were expecting a 125,000 gain.  The unemployment rate fell to 8.1% from 8.3% in Jul and consensus due to a sharp drop in the labour force, whilst  average hourly earnings  experienced no change on a mom basis (a revised 0.1% in Jul), worse than consensus of 0.2%.  Private payrolls increased 103,000 in Aug after gaining 162,000 the prior month. The consensus called for a 134,000 boost. The  average workweek for all employees stood at 34.4 hours, the same as Jul’s revised figure, but coming short of consensus of 34.5 hours. (Bloomberg)