Important developments today:
1. Oil prices rise on continued turmoil in MENA region
2. Germany’s manufacturing speeds on
3. German Federal Labor Agency showed that the number of people out of jobs in February declined
Oil prices rise on continued turmoil in MENA region. Oil prices climbed on Tuesday as escalating Libyan turmoil continued to raise concerns about wider unrest across the region. U.S. crude future for April delivery was up as much as $1.08 to $98.05 a barrel, and Brent crude for April settlement jumped $1.17 to $112.97 a barrel in afternoon trading. Crude oil prices averaged over $90 a barrel in February, compared with $76.45 a barrel in the same period last year. The oil market has been on edge as continued turmoil in Libya and protests in Yemen, Bahrain, and Oman fueled worries about the potential spread to other major oil producing nations in the region (such as Iran and Saudi Arabia).
Germany’s manufacturing speeds on. Supported by increasing exports of capital goods, Germany’s manufacturing sector is continuing to expand at fast pace. Markit’s manufacturing Purchasing Managers’ Index (PMI) for Germany increased to 62.7 in February, up from 60.5 in January, and well above the 50 mark threshold indicating expansion of manufacturing activity. Indeed, February’s index is the highest level reached since the inception of the PMI survey in 1996. However, on account of rising oil and commodity prices and a tight labor market, the PMI input price sub-index surged to its highest level on record, prompting concerns of the higher cost being passed on to consumers.
In other German economic news, figures released by the German Federal Labor Agency showed that the number of people out of jobs in February declined by a seasonally adjusted 52,000 to 3.07 million, the lowest level since September 1992. The adjusted jobless rate has now fallen to 7.3%, its lowest level since December 1991 [see Chart at http://gem or http://www.worldbank.org/gem]. The falling unemployment rate boosted business and consumer confidence to record levels in recent months. The Bundesbank forecasts 2% GDP growth in 2011 and that Germany’s pre-crisis level of GDP will be matched again towards the end of 2011.
Among Emerging Markets
In East Asia and the Pacific, China's seasonally adjusted PMI index for manufacturing fell to 52.2 in February from the previous month, a seven month low, as lending curbs and increased interest rates dampened domestic demand. The cost of inputs increased to a three month high, but a decrease in new orders suggests slower growth in manufacturing in the coming months. In Vietnam, the General Statistics Office announced that industrial output in February accelerated to an annual pace of 17.7% from 16.1% in the previous month.
In South Asia, India's real GDP grew 8.2% (y/y) in the fourth quarter, below median expectations, and slowing down from 8.9% growth recorded in the previous quarter. However, the manufacturing sector is expected to expand as indicated by the manufacturing PMI, which rose to 57.9 in February from 56.8, the highest value of the index in three months.
In Sub-Saharan Africa, South Africa's PMI advanced to 54.8 in February from 54.6 in the previous month, posting the fourth straight month of expansion in the manufacturing sector (indicated by a PMI reading above 50). Meanwhile the unemployment rate dropped to 24% in Q4-2010 from 25.3 in the previous three-month period.