Standard & Poor’s raised its sovereign rating on the Philippines by one notch to ‘BBB-‘ from ‘BB+’, becoming the second major rating agency to give the country investment-grade status. The rating agency cited “a strengthening external profile, moderating inflation, and the government’s declining reliance on foreign currency debt” for the upgrade.
The Chinese yuan advanced to a 19-year high against the dollar on Thursday after a 3-day public holiday, rising 0.15% to close at 6.1560 per dollar, after the central bank raised its daily fixing of the currency’s reference rate by the most in more than 6 months. The currency earlier touched a record high of 6.1537 per dollar, heightening speculation that the Chinese government is poised to make a change in the currency trading band.
High-income Economies…In the Eurozone, the ECB cut its main refinancing rate by 25 basis points (bps) to 0.5% and also lowered its marginal lending rate, at which it provides emergency lending to banks if they are unable to borrow in interbank markets, by 50bps to 1%. The ECB last cut rates in July 2012. Inflation in recent months has fallen well below the ECB’s inflation target rate of 2%, and stood at 1.2% in March, reflecting slowing energy inflation and widespread economic weakness.
US initial jobless claims fell to a seasonally adjusted five year low last week to 324,000, a decrease of 18,000 from the previous week. The less volatile four-week moving average fell to 342,250, a decrease of 16,000 from the previous week and marking a six-week low. The data follows on the heels of yesterdays’ payroll report which showed that hiring had slowed sharply in April.
Eurozone manufacturing PMI data for April showed continued contractions for the 21st straight month, with the index posting at 46.7, down from 46.8 in March. Rates of decline accelerated in Ireland and Austria, but eased slightly in France, Italy, Spain, the Netherlands and Greece. German output contracted for the first time in 2013 in April, joining ongoing downturns elsewhere. Output and new orders fell sharply, primarily due to weaker intra-Eurozone demand.
Developing Economies…Europe and Central Asia: Turkey’s manufacturing PMI eased to 51.3 in April, down from 52.3 in March. While the index is still in the expansion territory (above 50), this is the third consecutive decline since Janury.
Latin America and the Caribbean: Brazil’s manufacturing PMI fell to 50.8 in April, from 51.8 in March. Total new orders rose for the seventh straight month, though at the slowest rate since October, while new export orders fell slightly due to weak demand from key export markets.
South Asia: India’s manufacturing PMI dropped to 51 in April, down from 52 in March, which is the slowest pace in 17 months. Deceleration in domestic orders and power outages contributed to the declines.
Sub-Saharan Africa: South Africa’s manufacturing PMI, breaking with the trend, is up in April increasing to 50.5 from 49.3 in March. Expanding business activity, new orders added to the improving outlook.