Senate Advances Fast-Track Trade Bill Sought by Obama. President Barack Obama on Thursday moved closer to winning the power to speed trade deals through the U.S. Congress when the Senate advanced legislation important to his Asian trade push. Senators voted 62-38 to set up a speedy decision on the "fast-track" trade negotiating authority the president needs to complete the Trans-Pacific Partnership (TPP) trade deal. The TPP is part of Obama's so-called pivot to Asia, a strategy to counter China's rising economic and diplomatic clout in Asia. Obama called the vote "a big step forward," adding that his trade agenda dovetails with the "strong labor standards, strong environmental standards" that his fellow Democrats in Congress are demanding. (Reuters)
11th Malaysia Plan: The Final Push to High-Income Nation Status. The latest 5-year plan by the Economic Planning Unit (EPU) will guide the Malaysian economy through its final growth phase to the Wawasan 2020 goal of becoming a high-income nation. Targets an average annual GDP growth rate of between 5.0% and 6.0% from 2016 to 2020, slightly lower than the earlier 10th Malaysia Plan target of 6.0% (estimate: 5.3%). Targets gross national income (GNI) per capita of RM54,100 (US$15,690) by year 2020, which we view as possible if growth stays consistently above 5.0% per annum. The private-sector is expected to lead growth with both private consumption and investment expanding at a faster pace than public expenditure. (See Economic Viewpoint for further views)
Japan Manufacturing PMI Back in Expansion Territory. Japanese manufacturing activity rebounded modestly in May as output and new orders picked up, suggesting a much-needed improvement in demand at home and abroad. The Markit/JMMA flash Japan Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 50.9 in May from a final 49.9 in April. The index returned above the 50 threshold that separates contraction from expansion for the first time in two months. The output index also rose to a preliminary 51.7 in May, after shrinking in April. New orders rose to a preliminary 51.2 from 48.8 in April, ending two months of declines. (Reuters)
China Factory PMI Shrinks for Third Month. Chinese factory activity contracted for a third month in May and output shrank at the fastest rate in just over a year, a private survey showed, indicating persistent weakness in the world's second-largest economy that requires increased policy support. The preliminary HSBC/Markit Purchasing Managers' Index (PMI) fell to 49.1 in May, below the 50-point level that separates growth in activity from a contraction on a monthly basis. Economists had forecast a reading of 49.3, slightly stronger than April's final reading 48.9. After a brief rebound in February, the index has now been back in negative territory for three consecutive months. (Reuters)
Indonesian State Firms Yet to Receive Capital Injections. Indonesia's state-owned enterprises have yet to get billions of dollars in capital promised them by President Joko Widodo, because bureaucratic hurdles stand in the way. In February, Widodo's government said it would pump almost 40 trillion rupiah ($3.04 billion) into state firms so they could leverage the funds to refurbish Indonesia's creaky ports, roads and power plants. But Finance Minister Bambang Brodjonegoro said the money had not been handed out because the government had to issue a regulation to cover each capital injection. (Reuters)
Japan Unveils $110 Billion Plan to Fund Asia Infrastructure. Japan unveiled a plan on Thursday to provide $110 billion in aid for Asian infrastructure projects, as China prepares to launch a new institutional lender that is seen as encroaching on the regional financial clout of Tokyo and its ally Washington. The amount of Japanese funds, to be invested over 5 years, tops the expected $100 billion capitalisation of the Asian Infrastructure Investment Bank (AIIB), the Beijing-sponsored lender scheduled to begin operations next year. Japanese officials said the plan, announced by Prime Minister Shinzo Abe at a symposium of Asian officials and experts, represents a 30% increase over Tokyo's past infrastructure funding. (Reuters)
US Weekly Jobless Claims Total 274,000 vs. 271,000 Estimate. The number of Americans filing new claims for unemployment benefits rose slightly more than expected last week, but the underlying trend continued to suggest the labor market was tightening. Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 274,000 for the week ended May 16, the Labor Department said on Thursday. Claims for the prior week were unrevised. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 5,500 last week to 266,250. That was the lowest level since April 2000. (Reuters)
Markit: U.S. Factory Activity Growth Slows for Second Month. Growth in the U.S. manufacturing sector slowed for a second straight month during May, with new orders increasing at their slowest pace since January 2014. Financial data firm Markit said its preliminary U.S. Manufacturing Purchasing Managers' Index fell to 53.8 in May from the final April reading of 54.1. Economists = had forecast the May figure would be 54.5. A reading above 50 indicates expansion in the sector, whose jobs growth picked up in May from April, Markit said.The index's flash output component fell to 55 from the final April reading of 55.3. The May flash output level was the lowest since December 2014, according to Markit data. (Reuters)
Source: Kenanga Research - 22 May 2015