Wednesday 2 December 2009

RBA hikes rate, BoJ adds liquidity

Yet another rate hike from the Reserve Bank of Australia on Tuesday. AFP/CNA reports:

Australia raised interest rates for an unprecedented third month running Tuesday, announcing a 25 basis points rise to 3.75 per cent as it makes a "gradual recovery" from the financial crisis.

In contrast, a rate hike is far from the minds of BoJ officials. Again from AFP/CNA:

Japan's central bank said Tuesday it would inject 10 trillion yen (114 billion US dollars) in liquidity into financial markets to boost recovery from the country's worst post-war recession.

The Bank of Japan (BoJ) said it "decided to further enhance easy monetary conditions by introducing a new funds-supplying operation," adding it would also hold interest rates at super-low 0.1 percent to fight deflation.

Tuesday's economic reports were generally positive.

Bloomberg reports that manufacturing continued to expand in the US in November.

Manufacturing in the U.S. expanded in November for a fourth consecutive month, propelled by gains in orders and exports that signal growth will be sustained.

The Institute for Supply Management’s manufacturing index fell to 53.6, lower than forecast, from October’s three-year high of 55.7, according to the Tempe, Arizona-based group. Readings above 50 signal expansion...

The number of contracts to buy previously owned homes unexpectedly rose in October as consumers rushed to take advantage of a tax credit that was due to expire, another report today showed.

The index of signed purchase agreements, or pending home sales, climbed 3.7 percent to 114.1 after increasing 6 percent in September, the National Association of Realtors said. The ninth consecutive gain compares with the median forecast of a decline in a Bloomberg News survey of economists...

Construction spending in the U.S. was unchanged in October after declining five straight months, depressed by a drop in commercial projects as office and retail vacancies climbed, a report from the Commerce Department today also showed. Outlays declined on office buildings and commercial projects, while homebuilding increased.

Bloomberg reports that manufacturing also grew in the euro area in November.

Europe’s manufacturing industry grew for a second month in November after the euro-region economy emerged from its worst recession in more than six decades.

An index of manufacturing in the 16-nation euro area rose to 51.2 from 50.7 in October, London-based Markit Economics said today. That was higher than an estimate of 51 released on Nov. 23. The gauge is based on a survey of purchasing managers and a reading above 50 indicates expansion.

Manufacturing growth slowed in the UK though. Reuters reports:

Manufacturing activity fell last month from a near-two-year high set in October, according to the monthly PMI survey from the Chartered Institute of Purchasing and Supply and Markit.

The headline index dropped to 51.8 from 53.4 and new orders fell sharply to 53.0 from 58.0, though both measures remained above the 50-level that separates growth from contraction, where the main index has been for four of the past five months...

Growth in house prices has also slowed since the summer, the monthly survey from mortgage lender Nationwide confirmed. House prices rose by 0.5 percent in November, unchanged from October and well below monthly growth rates of 1 percent or higher between May and September.

There is no sign of slowing yet in China though. From AFP/CNA:

China's manufacturing activity continued to expand in November as rising overseas demand for Chinese goods helped drive the rebound in the world's third-largest economy, a survey showed Tuesday.

The HSBC China Manufacturing PMI, or purchasing managers' index, rose to 55.7 in November from 55.4 in October, the survey showed...

A separate official PMI published by the National Bureau of Statistics showed manufacturing activity was steady at 55.2 in November - the highest since May 2008.

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