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U.S. recovery still on ropes in late summer: Fed

admin — Wed, 07 Sep 2011 15:35:21 +0000

WASHINGTON | Wed Sep 7, 2011 6:21pm EDT

WASHINGTON (Reuters) – The sluggish U.S. recovery failed to gain speed in recent weeks and softened in some areas of the country, as volatile stock markets and sputtering factory activity weighed on growth, the Federal Reserve said on Wednesday.

“Economic activity continued to expand at a modest pace, though some Districts noted mixed or weakening activity,” the Fed said in its Beige Book collection of anecdotal reports of economic conditions in the Fed’s 12 districts.

A sharp decline in stock markets since mid-July and increased economic uncertainty have made businesses gloomier about the outlook in several regions, the Fed said.

Growth was modest or slight in five districts through late August, while the remaining seven described activity in terms such as “very subdued” or expanding “more slowly.”

U.S. consumer and business confidence nose-dived last month after a bruising political battle over the U.S. budget led Standard & Poor’s to strip the nation of its much-prized triple-A credit rating and sent stock markets tumbling. Employers responded by putting the brakes on hiring.

The shiver sent through the economy has led analysts to warn of heightened recession risks and has spurred Fed officials to consider further steps to bolster growth.

Many economists think the U.S. central bank, which eased monetary policy in early August by stating that it expected to hold overnight interest rates near zero at least through mid-2013, could ease further at its next meeting, on September 20-21, despite clear divisions on its policy committee.

With unemployment stuck above 9 percent, President Barack Obama will lay out a plan to spur job creation in a nationally televised address on Thursday. Just hours before, Fed Chairman Ben Bernanke will discuss his outlook for the economy.

The Fed’s Beige Book showed a slightly less downbeat mix of modest or weak growth in some districts balanced against slowing or minimal growth in others than did the prior report that covered the period into early July.

“The mixed, if slightly negative, nature of this report may simply reinforce the existing diversity of views about the outlook,” BofA Merrill Lynch economist Michael Hanson said in a research report.

EVANS, WILLIAMS SEE CASE FOR FURTHER ACTION

Two Fed officials on Wednesday said further monetary stimulus might prevent the economy from running out of steam altogether.

Chicago Federal Reserve Bank President Charles Evans, one of the central bank’s more growth-focused doves, repeated his view that the Fed should consider promising to keep rates low until unemployment drops to at least 7.5 percent.

“We need to take strong action now,” he told the European Economics and Financial Center in London. With inflation expected to stay below the Fed’s 2 percent target in the medium term, the case is clear for more aggressive easing, he said.

“Given how truly badly we are doing in meeting our employment mandate, I argue that the Fed should seriously consider actions that would add very significant amounts of policy accommodation.”

“If 5 percent inflation would have our hair on fire, so should 9 percent unemployment,” Evans said.

The president of the San Francisco Fed, John Williams, also allied himself with the dovish wing on Wednesday, saying the economy was like a patient facing heightened risks. Doctors would likely “offer a measure of protection against further deterioration in the patient’s condition and perhaps help him get back on his feet,” he said.

While the Fed may be inclined to ease policy further, some officials have made clear they stand opposed. In addition, Evans’ idea of offering a rate vow tied to the level of unemployment does not appear to enjoy widespread support.

Even Williams, who suggested the economy might need further help from Fed policies, stopped short of endorsing Evans’ suggestion of a direct link to the jobless rate, which he said could be confusing.

Instead, the central bank is more likely to move to rebalance its portfolio to weight its bond holdings more toward longer-term securities. That could push longer-term interest rates lower, perhaps stimulating mortgage refinancing, loans for car purchases, or business investment.

The Beige Book, which was prepared for the next Fed meeting, said consumer spending increased in most districts, but spending on items besides cars was flat or down in several places. Manufacturing conditions were mixed across the country and had slowed in many districts, it said.

Hard-hit residential real estate markets remained weak overall. A separate report on Wednesday showed demand for U.S. home loans fell for a third straight week last week although mortgage rates fell to or near record lows.

The Fed said price pressures edged lower in recent weeks, although retail prices rose in some districts. Labor markets were generally stable and some districts reported modest gains.

(Additional reporting by David Milliken in London and Ann Saphir in Seattle; Writing by Mark Felsenthal; Editing by Tim Ahmann and Leslie Adler)

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Jobless claims fall, slow recovery seen

admin — Wed, 28 Apr 2010 23:57:36 +0000

WASHINGTON (Reuters) – The number of U.S. workers submitting new claims for unemployment benefits fell slightly last week, implying only a gradual labor market improvement even as the economic recovery broadens out.

While the data on Thursday did not change views employers probably added to payrolls this month, analysts were disappointed with how slowly claims were declining and said it showed companies were reluctant to embark on a hiring spree.

Initial claims for state unemployment benefits fell 11,000 to a seasonally adjusted 448,000, the Labor Department said. That was slightly below market expectations claims would drop to 445,000.

“Some companies are still struggling and believe they can meet any increase in demand with a smaller workforce. The recovery in the labor market is probably going to be more modest than a lot of people are expecting,” said Paul Dales, a U.S. economist at Capital Economics in Toronto.

The Federal Reserve on Wednesday acknowledged the labor market was improving, but noted that employers remained reluctant to add payrolls. The U.S. central bank left overnight benchmark lending rates near zero and renewed its commitment to keep them low for an extended period.

Economists are concerned that claims remain above 400,000, a level they say is historically associated with a steady pace of jobs growth. Analysts anticipate data next week will show the unemployment rate was unchanged at 9.7 percent in April for fourth straight month.

The report had little effect on U.S. stocks, which rallied broadly as debt-ridden Greece looked closer to a bailout deal. Prices for U.S. government debt were flat, while the dollar fell against a resurgent euro.

UNEMPLOYMENT TO REMAIN HIGH

Though the manufacturing-led U.S. economic recovery is spreading out to other sectors, it is probably not vigorous enough to encourage much hiring. Indications are that unemployment will likely remain elevated for a while.

Gross domestic product data on Friday is expected to show the economy grew at a 3.4 percent annual rate in the first quarter, with consumer spending accounting for much of the advance, according to a Reuters survey.

While slower than the 5.6 percent pace set in the fourth quarter, it will be the third straight quarter of expansion as the economy climbs out of the worst downturn since the 1930s.

“The economy is doing better, growth will gradually get back up toward its potential and the unemployment rate will continue to come down slowly. We are on the right track,” said Ray Stone, managing director at Stone & McCarthy Research Associates in Princeton, New Jersey.

The four-week moving average of new claims, seen as a more-reliable barometer of labor-market trends, rose 1,500 to 462,500 last week, the department said. It was the fourth straight weekly increase.

Private hiring last month handed the economy its largest jobs gain in three years. While analysts believe payrolls grew again in April, they expect much of the boost to come from government hiring for a decennial census.

“We expect nonfarm payroll hiring of 175,000 for April, consisting of underlying hiring of 50,000 and a census contribution of 125,000,” wrote economists at Goldman Sachs.

The number of people still receiving benefits after an initial week of aid fell to 4.65 million in the week ended April 17, a touch above market expectations for 4.62 million.

The so-called continuing claims data covered the household survey week from which the national unemployment rate is derived.

The insured unemployment rate, which measures the percentage of the insured labor force that is jobless, was unchanged at 3.6 percent in the week ended April 17.

Separately, the Chicago Federal Reserve national activity index rose in March, but still indicated below-trend growth.

(Additional reporting by Ann Saphir in Chicago; Editing by Andrew Hay)

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Fragile Recovery for CAD

admin — Mon, 15 Mar 2010 16:51:27 +0000

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Retail sales rise brightens recovery picture

admin — Thu, 11 Feb 2010 23:06:40 +0000

Sales at retailers were unexpectedly strong last month, suggesting consumers were feeling a little more comfortable to spend and improving prospects for first-quarter economic growth.
Retail sales rose 0.5 percent as consumers stepped up spending not only on essential goods but luxury items as well, the Commerce Department said on Friday.
Optimism over the increase was tempered by a separate report showing that consumer sentiment ebbed slightly early this month. But analysts dismissed the slip as insignificant and focused on the gain in sales as a hopeful economic sign.
“After considerable hand-wringing about the underlying strength of retail sales in the past few months, this is a solid report. It indicates the recovery is on track,” said Brian Bethune, chief U.S. financial economist at IHS Global Insight in Lexington, Massachusetts.
Retail sales are being closely watched to determine whether consumers can sustain the economy’s recovery once government stimulus and the boost from restocking by businesses wanes.
Not only did the January sales increase come in above the 0.3 percent economists had forecast, sales data for December and November were revised upward as well. Compared to January last year, sales increased 4.7 percent.
While the report on consumer confidence showed worries over unemployment were weighing on sentiment, the slight slip left intact a longer-term trend toward improvement.
The Reuters/University of Michigan Surveys of Consumers’ preliminary index of sentiment came in at 73.7 for February, down from 74.4 in late January but up from 56.3 a year ago. Analysts had expected a rise to 75.0.
“February’s retracement does not seem to signal a fundamental shift in sentiment and is not likely to mean much for spending patterns in the months ahead,” said Stephen Stanley, chief economist at RBS in Stamford, Connecticut.
Worries that a surprise move by China to raise bank reserve requirements could hurt the global recovery, overshadowed the retail sales report, hurting U.S. stocks. The dollar neared a nine-month high against the euro, helped by skepticism over a proposed rescue deal for debt-stricken Greece.
The U.S. economy has grown for two straight quarters following the worst downturn since the Great Depression of the 1930s. Growth in the fourth quarter came in at a 5.7 percent annual rate, the fastest in six years.
Analysts, who are also tracking the impact of recent severe winter weather on the economy, said the year’s strong start to sales bodes well for first-quarter spending and growth.
“Even folding in potentially weak February consumption as a result of severe weather and automaker difficulties, it appears that real consumer spending is on a 2.5-3 percent quarterly trajectory,” said Steven Wieting, an economist at Citigroup in New York.
Core retail sales, which correspond most closely with the consumer spending component of the government’s gross domestic product, rose 0.8 percent after falling 0.3 percent in December. Consumer spending rose at a 2 percent annual rate in the fourth quarter.
While the U.S. recovery is gaining momentum, Europe has faltered. GDP in the 16-country euro-currency zone rose only 0.1 percent in the fourth quarter from the prior quarter, well short of the 0.4 percent rise that lifted it from recession in the third quarter.
A second report from the Commerce Department showed U.S. business inventories slipped 0.2 percent in December after rising 0.5 percent in November.
Analysts said the decline was smaller than the government had estimated when it released figures on fourth-quarter economic growth last month and, together with upward revisions to retail sales, would offset the negative impact on fourth-quarter GDP from a bigger than expected trade deficit.
Motor vehicle and parts purchases were flat last month, after rising 0.1 percent in December. Excluding motor vehicles and parts, retail sales rose 0.6 percent in January after slipping 0.2 percent the prior month.
Electronics and appliance stores saw a rebound in sales and consumers continued to splurge on sporting goods, hobby-related items, books and music last month. Sales at general merchandise stores rose 1.5 percent in January, the biggest gain since February 2009.
For a graphic comparing retail sales and consumer sentiment, see:

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Recovery, debt woes to hound stocks

admin — Sat, 06 Feb 2010 14:24:57 +0000

Recovery, debt woes to hound stocks
Stocks face more turbulence that could send indexes spiraling through key levels next week as doubts about the pace of the global recovery persist and fears over Europe’s sovereign debt woes rattle sentiment.
Investors worry that the debt problems will hinder efforts to sustain the nascent economic recovery and undermine confidence in the stability of governments that stand behind the euro.
With the Dow briefly dipping back below 10,000 and the benchmark S&P 500 down 7.3 percent from its 15-month closing peak of January 19, money managers and analysts say there is a growing sense that the U.S. stock market’s rally from the lows of March 2009 has all but run its course.
“I am in a camp that believes we’re in a correction. The mood has turned short-term negative,” said Eric Kuby, chief investment officer at NorthStar Investment Management Corp in Chicago. “The general trend for more than nine months has been for the market to rally, but now it seems as if the enthusiasm has abated, and it’s hard for the market to move forward.”
Investors had bet the start of 2010 would show that the recovery was gaining momentum, but their optimism has been met with more signs of turbulence in the labor market and by worry over possible contagion from fiscal upheaval in Greece, Portugal and Spain.
As a result, the euro has fallen sharply against the U.S. dollar due to risk aversion, hurting stocks and the prices of global commodities. On Friday, the benchmark S&P 500 capped its fourth straight weekly decline, falling 0.7 percent. The Dow dropped 0.6 percent and the Nasdaq shed 0.3 percent.
“The markets are not taking any prisoners. They’re not looking at things as isolated incidents. They’re looking at this as the spreading of a contagion,” said John Praveen, chief investment strategist at Prudential International Investments Advisers LLC in Newark, New Jersey.
“It’s not clear at this point whether this will stop at Europe or whether the correction has run its course.”
Uncertainty surrounding the Obama administration’s legislative reform agenda for the banking and healthcare sectors added to the bearishness, along with uneasiness about the United States’ own ballooning fiscal deficit.
There are also signs that China is looking to curb lending to prevent its economy from overheating, which risks derailing the global recovery if stimulus was withdrawn too soon.
The U.S. government’s January non-farm payrolls report sowed even more caution on Friday as it showed the economy unexpectedly lost 20,000 jobs in January.
All told, the correction was long anticipated, but there is uncertainty about how far it will go. The technical damage from the latest correction briefly drove the Dow below 10,000 on Thursday and Friday, but the index has yet to close under that level.
Meanwhile, the S&P 500 has broken through key support at 1,085 and slid as low as 1,044.50 on Friday before rebounding slightly toward the close.
Market technicians have warned that further downside could take the S&P 500 as low as 1,036 — a level that will signify the “textbook” 10 percent correction from the January 19 closing peak.
But if the previous pullbacks — in July and in October 2009 — are any indication, investors could again look for opportunities in the days ahead to scour the market for stocks whose prices have been pushed down to attractive levels. Late on Friday, there was some evidence of investors snapping up beaten-down shares as technology and materials sectors led a last-minute bounce.
“When everything is too bleak, that’s when you should look for the other side,” said Ron Florance, director of asset allocation and strategy for Wells Fargo Private Bank in Charlotte, North Carolina. “Corrections are like diets. They’re never really pleasant, you kind of dread them, but at the end of the year, you look better and you feel healthy.”
The highlight on the economic calendar is set to be the Commerce Department’s January retail sales report on Thursday, along with December business inventories and weekly jobless claims. That trio of reports will follow the release on Wednesday of the U.S. international trade deficit for December. On The Reuters/University of Michigan survey of consumer sentiment’s preliminary February reading is due on Friday. For details, see
Particular attention will be paid to Federal Reserve Chairman Ben Bernanke, who is scheduled to testify before the House Financial Services Committee on Wednesday. The hearing will explore the unwinding of the Fed’s emergency programs.
The steady stream of fourth-quarter earnings will continue. Next week’s focus will shift to more consumer-oriented companies, with Walt Disney Co, Coca-Cola Co, CVS Caremark Corp, PepsiCo, Marriott International, Hasbro, and Electronic Arts among those due to report.
The consumer’s financial health is key as investors look for clarity on the recovery’s prospects.

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Oil slips below $77 as demand lags economic recovery

admin — Wed, 03 Feb 2010 07:33:12 +0000

SINGAPORE (Reuters) – Oil fell a few cents on Thursday to trade below $77 as rising crude inventories in the United States signaled that a rebound in U.S. economic activity was failing to translate into higher demand.
U.S. crude for March delivery declined 17 cents to $76.81 a barrel at 0736 GMT (2:36 a.m. EST), while London ICE Brent shed 21 cents to $75.71. Prices are now around 48 percent below their July 2008 peak of more than $147.
A government report Wednesday showed U.S. crude stockpiles rose more than expected as imports gained and refineries kept operating at unusually low rates.
Although manufacturing has shown a strong rebound, U.S. demand for distillate fuel, including diesel, plunged more than 9 percent in the four weeks to January 29 from a year earlier, according to the Energy Information Administration (EIA), part of the Department of Energy (DOE).
“Yesterday’s DOE data was a disappointment,” said Serene Lim, an ANZ oil analyst based in Singapore.
“We saw an unexpected increase in crude inventories, which could be explained by higher imports and lower refinery utilization, but the underlying concern is that demand is still very weak.”
Total U.S. oil demand over the past four weeks declined 2 percent, showing no improvement from the corresponding period in the previous week’s report.
U.S. refinery utilization, the proportion of capacity under operation, last week fell by 0.8 percentage point to 77.7 percent of capacity. That was the lowest level since 1990 barring hurricane disruptions.
News this week that the Institute for Supply Management’s index rose to its highest since August 2004 raised expectations for a strong recovery in U.S. manufacturing.
Oil in New York has rebounded by more than $4 this week from a six-week low of $72.43 on January 29. But prices are still far from a 15-month high close to $84 reached on January 11.
U.S. non-farm payrolls are expected to have increased by 8,000 in January, the second monthly gain since the recession started in December 2007, according to the 20 forecasters who have given the most accurate predictions in recent Reuters polls. The data is due on Friday.
Some analysts remain upbeat that industrial demand for oil will soon recover, including Barclays Capital’s Paul Horsnell, head of commodities research.
“The evidence of a recovery in manufacturing, better trucking indications and a slow turning of the manufacturing goods inventory cycle all still point to an improvement in diesel demand that will eventually percolate through to the data,” Horsnell said in an e-mailed note.
An unusually cold winter across the northern hemisphere helped drain some excess oil supplies from floating storage, but the nearing of spring may halt that process.
“Because of the winter season ending soon, we won’t see much of a further decline of inventories in floating storage,” Lim said.
Stocks of crude oil and petroleum products stored on tanker ships around the world likely fell by 27 million barrels last month, reducing a floating supply overhang that has depressed oil and product prices, U.S. bank Goldman Sachs said Wednesday in a note to clients.
Goldman estimates the drawdown left a total of 98 million barrels of crude and 80 million barrels of products in floating storage as of end-January.
State-owned Chinese oil firm CNPC expects China’s crude oil imports to increase 9.1 percent to 212 million tonnes in 2010, or 4.24 million barrels per day, a company report showed on Thursday.
China’s apparent oil demand will grow more than 5 percent to 427 million tonnes this year, or 8.54 million barrels per day (bpd), the report said.
High winds and rough seas caused pilots to stop moving ships into and out of the key oil port of Houston late on Wednesday, the U.S. Coast Guard said.
(Editing by Clarence Fernandez, Himani Sarkar)

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News Corp profit up on ad recovery, Avatar

admin — Tue, 02 Feb 2010 10:33:04 +0000

News Corp profit up on ad recovery, Avatar
NEW YORK (Reuters) – News Corp’s results beat expectations thanks to “Avatar” and improved advertising sales, and the company raised its outlook and dividend in a sign of confidence for the battered media sector.
The 25 percent dividend increase announced on Tuesday by Rupert Murdoch’s media conglomerate would have been unthinkable a year ago, when crumbling ad revenue decimated TV and newspapers, and sales of DVD and books also cratered.
While the media business still has obstacles, fortunes have started to improve with the economy. Investor interest in media has also been rekindled by a new generation of devices from the likes of Amazon.com and Apple Inc.
News Corp Chief Executive Rupert Murdoch was extremely bullish on a conference call with Wall Street analysts and journalists, saying the company’s future would benefit from the willingness of customers to pay for quality content.
“Content is not just king, it’s the emperor of all things electronic,” he said.
News Corp shares, which have risen 21 percent in the last six months, gained another 5.7 percent after the rosy quarterly results. The company also raised its outlook, saying fiscal 2010 income should climb in the low 20 percent range.
Perhaps nothing points to a recovery in the entertainment business as clearly as the success of the blockbuster 3-D movie “Avatar,” which has had more than $2 billion in ticket sales, overtaking “Titanic” to become the biggest movie of all time.
It earned nine Oscar nominations and News Corp said 50 percent or more of the profit from the James Cameron-directed film would show up over the next two or more quarters. News Corp said it was in early talks for a sequel.
“Jim has ideas for one,” said Murdoch. “We haven’t come to any agreement with him or budgets or timing or anything.”
But Murdoch made clear that News Corp would not be interested in acquiring film studios of MGM at reported valuations or Walt Disney Co’s Miramax. Both film companies are said to be up for sale.
“At the right price, we’d be interested,” Murdoch said on MGM. “But it appears that other people are more interested so I think you can count us out of that one altogether.”
Behind the strength of “Avatar” and better ad climate, News Corp posted fiscal second-quarter net income of $254 million, or 10 cents a share. That includes a $500 million litigation settlement payout to Valassis Communications.
A year earlier, News Corp posted a net loss of $6.4 billion, or $2.45 a share, which reflected a major writedown for its purchase of Dow Jones, and other items.
Excluding charges in both periods, second-quarter adjusted profit was 25 cents a share, up from 15 cents a year ago. Analysts were expecting 20 cents a share on average, according to Thomson Reuters I/B/E/S.
Revenue rose a better-than-expected 10 percent to $8.7 billion.
“Basically every division outperformed, the ad market is back and newspapers are probably the best outperformer on the operating incoming,” said Miller Tabak analyst David Joyce.
The dividend increase shows the confidence management has in growing operating income for the fiscal year, Joyce said. News Corp will raise the quarterly dividend to 7.5 cents.
Operating income at News Corp’s Hollywood studio business nearly tripled to $324 million, while the Fox cable programing unit posted 35 percent growth in operating profit. And ad sales improved at both the television and newspaper divisions.
The newspaper unit posted a 30 percent rise in operating income because of higher ad revenue at The Wall Street Journal, lower expenses and favorable foreign exchange rates.
Murdoch had been among the most vocal advocates of the newspaper industry moving to a paid digital model, and has blazed a trail with WSJ.com. He said more digital-newspaper subscription models would be rolled out in the coming months.
He has also set his focus on mobile devices — the most buzzed-about growth area for TV shows, newspapers, movies and books — and complained that Amazon’s book pricing for e-reader devices like the Kindle devalues the publishing industry.
Murdoch said Amazon.com was prepared to renegotiate over e-book pricing.
Though the company does not break out numbers for MySpace, the unit that houses the social networking site saw its earnings contributions decrease by $32 million during the quarter because of lower search and advertising revenue.
Shares rose to $13.49 in late trade, after closing the regular session at $12.76, up 1.84 percent.
,

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Activity indicators in Peru and Colombia reinforces the recovery trend in the region

admin — Mon, 25 Jan 2010 22:08:40 +0000

Mon, Jan 25 2010, 19:15 GMT
The release of activity indicators in Peru and Colombia reinforces the recovery trend in the region. In Mexico, the inflation expanded more than expected due to the fiscal program. The deficit in the current account continued to increase in Brazil in consequence of the economic dynamism. In Argentina, there are limited advances in the decision regarding the Central Bank Governor. In Venezuela the government intervened in other three banks.
Primary Surplus of the nonfinancial Public Sector reached $ 5.100 Millions. This result includes the accounting in December of $ 12.500 Millions of one-time income from capitalization by the IMF through Special Drawing Rights and revenues profitability of the Sustainability Fund previously held by Private Pension Funds.
Moreover, this week the Argentinean President authorized a parliamentarian meeting needed to provide institutional foundation to the removal of the Central Bank Governor. It is estimated that the commission will take at least a month to be issued.
Finally, it was released the official economic activity indicator (Monthly Economic Activity Estimator) of November, that grew by 0.5% seasonally adjusted with respect to October and 0.5% accumulated in the first eleven months of 2009.
Total credit expanded 1.6% m/m (14.9% y/y) in December. NPL’s, on the other hand, dropped for the first time since the beginning of the crisis and reached 4.4% in December.
The current account deficit continue to increase in the last month of the year and closed 2009 at USD -24.3 billions (-1.55% of the GDP). The surplus of USD 70.5 billions in the capital account, however, was more than enough to finance this deficit.
The net job creation was negative (-415,192) in December due to seasonal reasons. The figure was worse than expected by the markets.
The Ministry of Finance issued the first bonds in the local market. The amounts traded reached US$ 105 million for 10-year indexed bond at an auction rate of 3.3%, and US$ 125 million for local currency bonds at a rate of 6.5%. The issuance was over subscribed, which resulted in moderate upward adjustment in the rates associated with Central Bank bonds at the time of the announcement of the issue. The next issuance is scheduled for Jan. 27, including bonds with maturities of 5, 20 and 30 years for a total of approximately U.S. $ 275 million.
Key law on the regulation of salmon farming sector is delayed until March due to rejection in the House of Representatives. This most likely will result in postponed investment decisions in a sector that has already been strongly affected both by the ISA virus and a sluggish external demand.
In November, industrial production revealed the first positive growth since July of 2008 (2.0% yoy). Moreover, a sixth straight monthly increase appears when seasonally adjusted.
Retail sales increased 2.0% in November compared to the same period in 2008, reflecting an improvement in the household consumption.
Exports during November expanded 25.9% yoy. This growth can be explained by the higher exported volumes and the upturn of international prices for traditional goods.
January’s bi-weekly inflation rose 0.75% mom and 4.2% yoy (Dec-09: 3.6% yoy), first prices acceleration since last May. Core inflation rose 0.42% mom and 4.6% yoy. The triggers of this movement are new policy on public prices (gasoline), tax changes (VAT increase) and pressures from processed food prices. We expect that fiscal policy will be the main inflationary driver in 2010. December’s trade Balance was -248MD. Exports grew 22.8% and imports 11.7%, marking the beginning of the recovery of the external sector. Next week November’s IGAE will be published, we expect it to grow mom driven by industrial production.
GDP grew by 4.2% y/y in November (0.8% y/y in October), the highest rate of the year. The monthly result was mainly explained by Services sector (8.7% y/y), especially Governmental Services (25.7% y/y), and Construction (13.8% y/y). The November figure confirms that the recovery of economic activity has been consolidating.
In December, local cement dispatches expanded by 11.5% y/y (11.6% y/y in November), suggesting that the construction sector has maintained an important expansion in this month.
Sudeban intervened in three small banks. By decision of Superintendency of Banks were closed Banco del Sol-Development Bank, InverUnion-Commercial Bank and Mi Casa-Saving Bank, which represented 3% of total deposit. The resolution indicates that administrative and management problems drove to iliquidity situation that required the authorities` intervention.
Unemployment rate closed the year at 6.6%, figure 60 bp greater than the registered in December. By this ways, unemployment showed the eighth monthly increases in a row.

fxstreet.com

The world’s superpower and neighbor remain on the right track for recovery…

admin — Fri, 22 Jan 2010 09:25:28 +0000

Fri, Jan 22 2010, 13:02 GMT
by ecPulse.com analysis team
The world’s largest economy; the Unites States, along with its major trading partner and territorial neighbor, Canada,remains onthe right track of economical healing from the ongoing downside pressures of the worst recession witnessed since WWII; however, a full strong recovery is still far from being seen since both governments of the North American continent keep on facing strong obstacles that are healable on a long-term.
Currentlystarting with the U.S, the present economical conjuncture, it is clear that the recovery path is gaining momentum throughout most economical activities and conditions in the country; having better data on consumer spending, home sales, and industrial production along with an obvious enhancement and expansion of the manufacturing and services sector in the country, although this month US Philadelphia Fed, which reflects general business conditions within the manufacturing sector, plunged to 15.2.
However, the continuous deterioration of the U.S key sector; the labor market, is the major obstacle postponing a full and strong recovery of the economy and is the key barrier that the U.S government is facing throughout the past phase and long-term upcoming period, keeping in mind that the U.S Conference of Mayors and research group Global insight reported this week that unemployment rates could stay or even rise above 10 percent, through 2013 in some areas, such as California’s central valley and cities in Nevada. Not forgetting that the national jobless level of the world’s superpower had recentlyreached 10 percent, which is the highest level in 26 years
MeanwhileU.S president; Barack Hussein Obama, along with his new administrationand government, continue on trying to heal this deteriorated labor sector of the country by creating new jobs across the country, alongside other efforts within the financial sector, knowing that yesterday the U.S president proposed to impose restrictions on risk-taking at banks.
As a result of this suggestion of limitation of banks risk-taking and overall trading restraint on U.S financial institutions; the U.S. stocks plummeted deeply yesterday for a second day throughout the midday and closing sessions, to erase all of this year’s strong gains for both the Dow Jones Industrial Average and the NASDAQ Composite, while crude prices plunged and Treasuries gained yesterday.
As for the world’s largest territorial country and foremost business partner; Canada, the U.S continues on recovering gradually from the crisis, knowing that its leading indicators index of last month that was posted this past Monday cheerful and unexpectedly rose to 1.5 percent, reflecting that its economy is on the right track; conversely the Bank of Canada chose to keep its interest rate unchanged at 0.25% this week, which could be the case until June till the economic conditions enhance further.
Furthermore, Statistics Canada will release today as it does every month the Canadian Retail Sales of November, that are highly forecasted to show a gloomy decline as they could fall around -0.2% for November; while Retail Sales Less Autos could climb up to 0.5%, indicating once again that the revival of the country remains slow but sure.

fxstreet.com

Hesitant Wall Street looks for more recovery evidence (AFP)

admin — Tue, 19 Jan 2010 23:19:25 +0000

, hesitant about the pace of recovery, gets a fresh batch of corporate earnings and economic data in the coming week that may help set the tone for a skittish market.
in the economic recovery and mixed signals from earnings and economic data, analysts said.
The market opens a holiday-shortened week Tuesday after the Martin Luther King observance, with a handful of economic reports expected, including on
and wholesale prices.
“That will leave the focus squarely on corporate earnings results,” said Avery Shenfeld at
.
Over the week to Friday, the
lost a modest 0.08 percent to 10,609.65, after hitting fresh 15-month highs earlier in the week.
dropped 1.26 percent to 2,287.99 and the broad Standard & Poor's 500 index shed 0.78 percent to 1,136.03.
The market saw roller-coaster action over the past week, with disappointment over weak results from aluminum giant
on Monday souring the mood at the start of the corporate earnings season.
. and banking giant
, which “should help revive investor confidence that the global economy is turning around,” according to Fred Dickson, market strategist at DA Davidson & Co.
Yet some analysts say it will be harder to push the market higher in the wake of the stunning 60 percent gains since last March, in anticipation of a recovery in economic and profit growth.
Kent Engelke, chief economic strategist at
, said he sees doubts about whether the economy can stand on its own when stimulus from government spending and ultra-low interest rates ends.
“I think equities will experience a period of tough sledding as it will take time for investors to gain confidence the world will not come to an end as the economy begins to be weaned off of its high octane energy,” he said.
said many market players are too pessimistic.
“Our positive economic outlook continues to proceed virtually on schedule,” he said.
“The all-important housing market bottomed four to five months ago, and somewhere in the future we expect dramatic improvements in home construction to try to catch up with nearly four years of pent-up demand.”
Auth said the labor market is close to job creation and consumer spending “has begun to rebound.”
“Given all this, we remain above-consensus for economic growth this year. Importantly, evidence suggests that this strong cyclical growth could last well into 2011,” he added.
said traders may have pushed the stock market up too far in anticipation of the earnings recovery.
“Earnings expectations have continued to rise and sentiment has made a significant move into the bullish camp,” he said.
“While stocks still have a strong profit recovery to feast on, they might just need a little time to digest.”
Hugh Johnson at Johnson Illington Advisors said too much cannot be read into the past week's action.
“What seems to be happening is that the stock market this year continues to advance but the gusto has been taken out of the market,” he said.
“It's too early in the earnings season to reach any conclusion about earnings, and as a result the investors have paused until they have a better idea. Participants are looking for signs of sustainable growth going forward. It is not enough anymore to beat (forecasts) on the bottom line.”
Bonds rallied in the week. The yield on the 10-year Treasury bond fell to 3.6767 percent from 3.808 percent a week earlier and that on the 30-year bond dropped to 4.575 percent against 4.695 percent.
and prices move in opposite directions.

us.rd.yahoo.com