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Prospects Daily: Euro Area exports fall…Russia’s industrial production growth edges up, Philippines’ remittances growth accelerates

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Financial Markets… Net foreign purchases of U.S. financial assets fell to $1.3 billion in October, down from $3.2 billion in September, as investors sharply reduced their holdings of equities and mortgage-backed bonds. China remained the biggest foreign U.S. creditor, increasing its U.S. Treasury holding by $7.9 billion to $1.16 trillion. Japan continued to be the second-largest foreign debt holder, raising its Treasury holding by $5.2 billion to $1.13 trillion.

The yen plunged to the lowest level since April 2011 against the dollar, sliding to 84.48 per dollar in earlier trading, as Japan’s election outcome pointed to possibility of aggressive monetary easing. Japan’s currency felt to as low as 111.32 per euro, the weakest level since March 21.

Developing-country stocks fell for the first time in nine trading days, with the benchmark MSCI index losing 0.4%, as a sharp drop in Russian stocks offset a four-month high in Chinese equities. Nevertheless, developing-country equities have gained 13% this year, outperforming the 12% increase of developed country equities.

High-income EconomiesEuro Area exports fell for a second month in October, declining by a seasonally adjusted 1.4% (m/m) following a 1.3% decline in September. Exports declined in Germany (-3.6% m/m), France (-2.1%) and Italy (-1.4%), but rose in Spain (+3.8%). Euro Area imports, however, grew 0.6% (m/m) in October, after falling 3% in September. The trade surplus narrowed to 7.9 billion euros from 11 billion euros in the previous month.

The Euro Area’s nominal hourly labor costs growth edged up to 2% (y/y) in the third quarter of 2012, after rising 1.9% in the second quarter, with wage gains in most core countries outpacing those in the periphery.

The Conference Board’s leading economic index for France declined 0.5% in October to 114.4, following a 0.7% increase in September, while the coincident index which measures current economic activity fell 0.1%, with the indexes suggesting that economic activity is still weak and not likely to pick up in the near term.

UK housing prices fell 3.3% (m/m) in the first weeks of December (the most in ten years), following a 2.6% (m/m) decline in November, as the UK property market is struggling to gain momentum as a weak economic recovery deter buyers. However, prices were 1.4% higher from a year earlier.

Singapore’s
non-oil exports fell 2.5% (y/y) in November due to a contraction in electronic shipments, following a 7.9% (y/y) increase the previous month.

Developing Economies…Overseas cash remittances in the Philippines increased by 8.5% (y/y) to $1.93 in October, faster than the 5.96% growth recorded in September.

Serbia's central bank raised its policy rate by another 30 basis points to 11.25% and stated that its open market operations would be aimed at withdrawing excess liquidity to restrain demand, which could impact the inflation and exchange rate. Serbia's inflation rate eased to 11.9% in November from October's 12.9%, but remains significantly above the bank's 4.0% annual inflation target (+/- 1.5 percentage points).

Russia's industrial production increased at a slightly faster rate of 1.9% (y/y) in November than the 1.8% growth seen in October. Growth accelerated for the first time in four months. Production in the mining and quarrying industry gained 0.3% (y/y), while manufacturing production grew by 4%. On a monthly basis, industrial production grew by a seasonally adjusted 0.6% in November, reversing a 0.7% decline in October.

The unemployment rate in Turkey increased to a seasonally adjusted 9.4% in September from 9.2% in August. The number of unemployed rose to 2.6 million from 2.5 million, while employment rose to 25 million from 24.7 million. The employment rate was up to 45.6%, from 45.1% recorded in August.

Turkey's consumer confidence index rose to 89.2 in November reversing the downward trend observed in the past three months, reflecting consumers’ satisfaction over their strengthening purchasing power.
 

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