The Weekly Wrap

KEY DEVELOPMENTS – INTERNATIONAL

April 30 (Bloomberg) -- The tightening of Singapore’s monetary policy earlier this month won’t completely counter price pressures, as efforts to reduce foreign workers in the economy push up business costs, the central bank signaled. “While changes in the foreign worker policy are necessary to ensure a more efficient allocation of resources and a more productive workforce over the medium term, the latter will take time to come to fruition,” the Monetary Authority of Singapore said in its Macroeconomic Review.

May 2 (Bloomberg) -- A Chinese manufacturing index rose in April, signaling that a rebound in the world’s second-biggest economy may help to offset constraints on global growth from austerity measures in Europe. The 49.3 final reading of a purchasing managers’ index from HSBC Holdings Plc and Markit Economics compares with a preliminary 49.1 reported April 23 and a final 48.3 in March. A separate index released yesterday by China’s statistics bureau and logistics federation was at 53.3, indicating the fastest growth in a year.

April 30 (Bloomberg) -- U.K. house prices rose in April for a second month, according to Hometrack Ltd., which said gains may not be sustained as demand fails to keep up with supply. Values rose 0.1 percent from March, when they increased 0.2 percent, the London-based property research company said. An indicator of demand rose at half the pace seen in the previous month.

April 30 (Bloomberg) -- German retail sales rebounded in March as declining unemployment, slowing inflation and higher wages bolstered households’ purchasing power. Sales, adjusted for inflation and seasonal swings, rose 0.8 percent from February, when they fell a revised 0.9 percent, the Federal Statistics Office in Wiesbaden said. Economists forecast a gain of 1 percent, the median of 26 estimates in a Bloomberg News survey showed. Sales increased 2.3 percent from a year earlier.

April 30 (Bloomberg) -- Spain’s economy shrank less than previously forecast in the first quarter as the economy officially entered its second recession since 2009. Gross domestic product fell 0.3 percent, the same as in the previous three months, the Madrid-based National Statistics Institute said. That compares with the Bank of Spain’s estimate on April 23 of a 0.4 percent decline. From a year ago, GDP fell 0.4 percent, INE said.

 April 30 (Bloomberg) -- Growth in loans to households and companies in the 17-nation euro area slowed in March as a cooling economy curbed demand for credit. Loans to the private sector grew 0.6 percent from a year earlier after gaining an annual 0.8 percent in February, the European Central Bank. The rate of growth in M3 money supply, which the Frankfurt-based ECB uses as a gauge of future inflation, increased to 3.2 percent from 2.8 percent.

April 30 (Bloomberg) -- European inflation slowed in April as energy costs increased at a weaker pace than a year ago. The inflation rate in the 17-nation euro region fell to 2.6 percent from 2.7 percent in March, the European Union’s statistics office in Luxembourg said in an initial estimate. Economists forecast consumer prices to rise 2.5 percent from a year ago, the median of 37 estimates in a Bloomberg News survey showed.

Sweden’s manufacturing expanded for a fourth consecutive month in April as export orders increased. An index based on responses from about 200 purchasing managers was unchanged at a seasonally adjusted 50.2 last month, Stockholm-based Swedbank AB, which compiles the index, said. A reading above 50 signals expansion. The median estimate of eight economists surveyed by Bloomberg was for the index to rise to 50.5.

May 2 (Bloomberg) -- German unemployment unexpectedly rose for the first time in six months in April as the sovereign debt crisis damped economic growth. The number of people out of work increased a seasonally adjusted 19,000 to 2.87 million, the Nuremberg-based Federal Labor Agency said. Economists forecast a decline of 10,000, the median of 34 estimates in a Bloomberg News survey shows. The adjusted jobless rate was 6.8 percent.

May 2 (Bloomberg) -- Euro-region unemployment rose to the highest in almost 15 years and manufacturing contracted for a ninth month, adding to signs the economy continues to weaken. The jobless rate in the 17-nation euro area increased to 10.9 percent in March from 10.8 percent in February, the European Union’s statistics office in Luxembourg said. That’s the highest since April 1997, when the rate reached a record high, according to Bloomberg News data going back to 1990.

May 2 (Bloomberg) -- Euro-area manufacturing shrank for a ninth month in April, adding to signs an economic slump in the region is getting worse. A factory gauge based on a survey of purchasing managers slipped to 45.9 from 47.7 in March, London-based Markit Economics said today. That’s the lowest in 34 months and compares with an estimate of 46 published on April 23. A reading below 50 indicates contraction.

May 2 (Bloomberg) -- U.K. mortgage approvals rose in March, defying predictions of a drop as a tax break for first-time home buyers expired. Lenders granted 49,860 loans to buy homes, compared with 49,029 in February, the Bank of England said in London. Economists forecast 48,000, based on the median of 21 estimates in Bloomberg survey.

May 3 (Bloomberg) -- Euro-area producer-price inflation slowed for a sixth month in March, suggesting companies were unable to pass on higher costs as the economy cooled. Factory-gate prices in the 17-nation euro region rose 3.3 percent from a year ago, the weakest annual gain since June 2010, after increasing 3.6 percent in February, the European Union’s statistics office in Luxembourg said. Economists forecast an increase of 3.4 percent, the median of 17 estimates in a Bloomberg News survey showed.

May 3 (Bloomberg) -- U.K. services growth slowed more than economists forecast in April as Bank of England policy makers prepare to weigh up prospects for the economy before a decision on their stimulus program next week. A gauge based on a survey of purchasing managers declined to 53.3 from 55.3 in March, Markit Economics and the Chartered Institute of Purchasing and Supply said in a report in London. The median forecast of 28 economists in a Bloomberg News survey was for a drop to 54.1.

May 3 (Bloomberg) -- The European Central Bank left interest rates on hold as the region’s economic slump deepens. ECB policy makers meeting in Barcelona today kept the benchmark interest rate at a record low of 1 percent, as predicted by all 58 economists in a Bloomberg News survey.

May 4 (Bloomberg) -- Euro-region services and manufacturing output contracted for a third month in April, adding to signs the economy is struggling to regain strength. A euro-area composite index based on a survey of purchasing managers in both industries dropped to 46.7 from 49.1 in March, London-based Markit Economics said. That’s below an initial estimate of 47.4 on April 23.

April 30 (Bloomberg) -- Consumer spending in the U.S. climbed in March after the biggest gain since August 2009, and incomes picked up, indicating the biggest part of the economy will help sustain the expansion. Household purchases, which account for about 70 percent of the economy, increased 0.3 percent, after a revised 0.9 percent gain the prior month that was stronger than first reported, Commerce Department figures showed. The median estimate of 72 economists surveyed by Bloomberg News called for a 0.4 percent rise. Incomes advanced 0.4 percent, the most in three months, and the savings rate rose.

April 30 (Bloomberg) -- The Institute for Supply Management-Chicago Inc. said its business barometer decreased to 56.2 in April from 62.2 a month earlier. Economists forecast the gauge would fall to 60, according to the median of 55 estimates in a Bloomberg News survey. Readings greater than 50 signal growth. Economists’ projections in the survey ranged from 58 to 62.9.

May 3 (Bloomberg) -- Fewer Americans than forecast filed applications for unemployment benefits last week, easing concern the job market was taking a turn for the worse. Jobless claims fell by 27,000 to 365,000 in the week ended April 28, a one-month low, from a revised 392,000 the prior period, Labor Department figures showed in Washington. The median forecast of 46 economists surveyed by Bloomberg News called for 379,000 applications.

May 3 (Bloomberg) -- Service industries in the U.S. expanded less than projected and consumer confidence weakened, signaling the world’s largest economy may be cooling. The Institute for Supply Management said today its non-manufacturing index fell to a four-month low of 53.5 in April from 56 in March. The median forecast of economists surveyed by Bloomberg News was 55.3.

KEY DEVELOPMENTS – Domestic

May 2 (Bloomberg) -- Indian manufacturing expanded at close to the slowest pace in three months in April, crimped by weaker demand that prompted the nation’s central bank to cut interest rates last month. The Purchasing Managers’ Index was at 54.9 from 54.7 in March, HSBC Holdings Plc and Markit Economics said in an e-mailed statement. A number exceeding 50 indicates growth.

May 3 (PTI/Bloomberg) -- Driven by rise in new businesses, services sector growth picked up momentum in April and business optimism hit the highest level since last June, according the HSBC services PMI (purchasing managers index) survey released. HSBC's business activity index or services PMI, compiled by its service Markit, rose to 52.8 in April from 52.3 in March, the bank said in a statement. However, the report said though positive this is a below-trend rate expansion of services output. 

Source: L&T Mutual Fund

Thanks,

Gaurav Agarwal

Head Dealer

DENIP Consultants Pvt Ltd