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Prospects Daily: U.S. stock reaches fresh record high on jobs report, U.S. employers add 175K jobs in February despite harsh weather, Mexico’s inflation rate slows, South Africa’s reserves increase

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U.S. stock reaches fresh record high on jobs report… U.S. employers add 175K jobs in February despite harsh weather…Mexico’s inflation rate slows, South Africa’s reserves increase

 

Financial Markets…U.S. equities advanced on Friday, with the S&P 500 index hitting a fresh intra-day record high, after the government report showed greater-than-expected U.S. job growth in February and revised-up January’s figures. But they trimmed earlier gains as investors turned their focus on lingering tensions in Ukraine. Meanwhile, developing-country shares declined as China experienced its first-ever onshore corporate-bond default, prompting concern growing bad debt will weigh on global growth.

Ukraine’s international bonds declined for a seven consecutive week as the political standoff between Russia and western governments over the Black Sea Crimea region continued. The $1 billion of Eurobonds due in June 2014 fell 1.3% to 91 cents on the dollar from 92.35 yesterday with the yield climbing by 6.5% to 49.633%. The Ukraine’s benchmark stock index (UX) retreated 0.8%, extending this week’s drop to 4.3%. In contrast, the country’s currency strengthened 1% to 9.11 per dollar.

 

High Income Economies… As a welcome surprise, U.S. employers stepped up hiring in February despite a blast of harsh winter weather, renewing hopes that the economy could accelerate this year. February's gain of 175,000 jobs, up from January's 129,000, coincided with a rise in the unemployment rate to 6.7 percent from a five-year low of 6.6 percent. The severe winter had less effect on hiring than expected, with construction companies, which usually stop work in bad weather, adding 15,000 jobs, manufacturing gaining 6,000 for a second straight month. Government also added 13,000 jobs, the most in six months, although shipping and warehousing companies and retailers did cut jobs in February.

German industrial production (IP) increased for a third straight month in January, as a mild winter boosted construction output, and signaled accelerating momentum. IP rose 0.8% (m/m sa), following a 0.1% rise in December. The increase was led by construction output which surged 4.4%, while manufacturing output rose 0.3%. On a three-monthly annualized basis, IP increased 6.9% (3m/3m saar) in January, following December’s 1.9% growth.

The leading economic index for Japan advanced to 112.2 in January from 111.7 in December, marking the fifth consecutive increase. At the same time, the coincident economic index, which measures the current condition of the economy, moved up to 114.8 in January from 112.3 in December, extended the run of continuous monthly growth since June 2013. The lagging index, a gauge of the past performance of the economy, increased to 115.6 in January from 114.5 in December.

 

Developing Economies… Europe and Central Asia: Turkey’s retail sales accelerated in January, rising 10.7% (y/y) from 3.4% (y/y) in December 2013. January’s strong retail sales growth was driven by non-food stores where retail sales were up 14.2% (y/y), while shops selling food, beverages and tobacco saw an increase of 7.3% (y/y). Month-on-month, retail sales rose 1.2% in January after decreasing by 0.3% (m/m) in December.

 

Latin America and the Caribbean: Mexico’s annual headline inflation, measured by the consumer price index, slowed to 4.2% in February after rising 4.5% (y/y) in January, as the effects of new taxes eased. Month-on-month, prices rose 0.25% down from 0.89% in January. Core inflation, which excludes volatile food and energy prices, rose 0.28% (m/m) slowing from 0.85% (m/m) in January.

 

Sub-Saharan Africa: South Africa’s gross reserves increased in February, rising to US$50.1bn up from US$49.3bn in January, exceeding economists’ forecast of US$49.7bn. Net reserves also rose, increasing to US$45.3bn from US$44.9bn in January, slightly higher than economists’ forecast of US$45.2bn, mainly due to an increase in foreign currency deposits.

 

Financial Markets…U.S. equities advanced on Friday, with the S&P 500 index hitting a fresh intra-day record high, after the government report showed greater-than-expected U.S. job growth in February and revised-up January’s figures. But they trimmed earlier gains as investors turned their focus on lingering tensions in Ukraine. Meanwhile, developing-country shares declined as China experienced its first-ever onshore corporate-bond default, prompting concern growing bad debt will weigh on global growth.

Ukraine’s international bonds declined for a seven consecutive week as the political standoff between Russia and western governments over the Black Sea Crimea region continued. The $1 billion of Eurobonds due in June 2014 fell 1.3% to 91 cents on the dollar from 92.35 yesterday with the yield climbing by 6.5% to 49.633%. The Ukraine’s benchmark stock index (UX) retreated 0.8%, extending this week’s drop to 4.3%. In contrast, the country’s currency strengthened 1% to 9.11 per dollar.

High Income Economies… As a welcome surprise, U.S. employers stepped up hiring in February despite a blast of harsh winter weather, renewing hopes that the economy could accelerate this year. February's gain of 175,000 jobs, up from January's 129,000, coincided with a rise in the unemployment rate to 6.7 percent from a five-year low of 6.6 percent. The severe winter had less effect on hiring than expected, with construction companies, which usually stop work in bad weather, adding 15,000 jobs, manufacturing gaining 6,000 for a second straight month. Government also added 13,000 jobs, the most in six months, although shipping and warehousing companies and retailers did cut jobs in February.

German industrial production (IP) increased for a third straight month in January, as a mild winter boosted construction output, and signaled accelerating momentum. IP rose 0.8% (m/m sa), following a 0.1% rise in December. The increase was led by construction output which surged 4.4%, while manufacturing output rose 0.3%. On a three-monthly annualized basis, IP increased 6.9% (3m/3m saar) in January, following December’s 1.9% growth.

The leading economic index for Japan advanced to 112.2 in January from 111.7 in December, marking the fifth consecutive increase. At the same time, the coincident economic index, which measures the current condition of the economy, moved up to 114.8 in January from 112.3 in December, extended the run of continuous monthly growth since June 2013. The lagging index, a gauge of the past performance of the economy, increased to 115.6 in January from 114.5 in December.

Developing Economies… Europe and Central Asia: Turkey’s retail sales accelerated in January, rising 10.7% (y/y) from 3.4% (y/y) in December 2013. January’s strong retail sales growth was driven by non-food stores where retail sales were up 14.2% (y/y), while shops selling food, beverages and tobacco saw an increase of 7.3% (y/y). Month-on-month, retail sales rose 1.2% in January after decreasing by 0.3% (m/m) in December.

Latin America and the Caribbean: Mexico’s annual headline inflation, measured by the consumer price index, slowed to 4.2% in February after rising 4.5% (y/y) in January, as the effects of new taxes eased. Month-on-month, prices rose 0.25% down from 0.89% in January. Core inflation, which excludes volatile food and energy prices, rose 0.28% (m/m) slowing from 0.85% (m/m) in January.

Sub-Saharan Africa: South Africa’s gross reserves increased in February, rising to US$50.1bn up from US$49.3bn in January, exceeding economists’ forecast of US$49.7bn. Net reserves also rose, increasing to US$45.3bn from US$44.9bn in January, slightly higher than economists’ forecast of US$45.2bn, mainly due to an increase in foreign currency deposits.

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