Economy Highlights today (5th July,2011)

US - Payrolls probably rose at pace that failed to reduce jobless rate

Employers in the US probably expanded payrolls at a pace that failed to reduce the unemployment rate in June as companies sought to contain costs amid slower growth, economists said a report may show this week. Payrolls climbed by 100,000 workers after a 54,000 increase in May that was the smallest in eight months, according to the median forecast of economists surveyed by Bloomberg News ahead of Labor Department data due 8 July. The jobless rate held at 9.1%. Another report may show growth in services cooled. A recovery that Federal Reserve Chairman Ben S. Bernanke said is “frustratingly slow” explains why employers such as Lockheed Martin Corp. (LMT) and Gannett Co. are cutting positions or becoming reluctant to add as many workers. Faster payroll growth is needed to spur consumer spending that accounts for 70% of the economy. (Bloomberg)


China - Services slowdown boosts speculation government may ease tightening

China’s non-manufacturing industries expanded at the slowest pace in four months in June, sending stocks higher on speculation the government may ease monetary tightening policies aimed at taming inflation. A purchasing managers’ index dropped to 57 from 61.9 in May, the China Federation of Logistics and Purchasing said on its website yesterday. A reading above 50 indicates expansion. The Shanghai Composite Index rose 1.7%, extending a two-week rally, as expectations climbed that the government will refrain from raising interest rates and ease some lending restrictions due to slowing growth in manufacturing and services. Vice Premier Wang Qishan urged banks to increase financing to small companies that are having problems raising funds, according to a statement yesterday from the State Council. (Bloomberg)


EU - Germany raises annual borrowing targets more than 10% on costs of bailout

German Chancellor Angela Merkel’s government raised borrowing targets by more than 10% for the three years through 2015 after pledging contributions to a future European bailout fund, its multi-year budget plan shows. Borrowing will amount to EUR24.9bn (USD36.2bn) in 2013, more than the EUR22.3bn the Cabinet endorsed on 16 March, according to the 2013-2015 budget plan drafted by the Finance Ministry. The government aims to borrow EUR18.7bn in 2014 and EUR14.7bn in 2015, up from EUR15.3bn and EUR13.3bn, respectively. (Bloomberg)


Thailand - Yingluck may spur prices, Baht in 'double whammy' for exporters

Efforts by Thailand’s incoming government to boost growth and lift incomes may accelerate inflation, forcing interest rates higher and increasing business costs even as a strengthening currency threatens exports. The Bank of Thailand is assessing the economic effect of policies that may be implemented by the Pheu Thai party after it won the 3 July election, director Mathee Supapongse said. Pheu Thai, which is assembling a five-party coalition that would hold 299 seats in the 500-member parliament, campaigned on pledges to raise the minimum wage and guarantee rice prices for farmers. (Bloomberg)