Japan’s machinery orders increased more than economists expected and South Korea’s unemployment fell as Asian economies show resilience in the face of Europe’s sovereign-debt crisis.
Bookings, an indicator of capital spending, rose 5.7 percent in April from March, the Cabinet Office said in Tokyo. That compared with analysts’ median estimate of a 1.6 percent gain. South Korea’s jobless rate declined to 3.2 percent in May from 3.4 percent in April.
Sri Lanka kept interest rates on hold today as central bank Governor Ajith Nivard Cabraal told Bloomberg Television that his nation’s economy can grow more than 7 percent this year. Spain’s borrowing costs climbing to a record yesterday, underscoring the threat of sovereign bailouts that would stretch European Union finances to their limit.
“Asian economies are proving pretty resilient,” Matthew Circosta, an economist at Moody’s Analytics in Sydney said. “We are certainly seeing some stabilization in growth across Asia,” he said, adding that fiscal and monetary stimulus in China will support the region.
The MSCI Asia Pacific Index was little unchanged as of 12:14 p.m. in Tokyo before a bond sale in Italy that may show whether investors’ concerns about Spain are spreading to the larger economy.
“In the immediate term, tensions emanating from the euro area are the most serious potential risk for developing countries,” the World Bank said in a twice-yearly report yesterday.
Sri Lanka’s Cabraal said today that growth momentum was sustained in the first quarter and the economy can expand 7.2 percent this year “unless something dramatic happens in the third or fourth quarters, which may not be that likely.”
The decision to keep interest rates unchanged showed that officials want to shield growth from weakness in exports even as a slump in the rupee fans inflation. The central bank left the reverse repurchase rate at 9.75 percent and the repurchase rate at 7.75 percent. The Bank of Thailand will also keep borrowing costs unchanged today, according to a survey of economists by Bloomberg News.
In Australia, central bank Governor Glenn Stevens today described the benefits of a strong Australian dollar, saying that it benefits consumers and probably will be sustained as mining investment intensifies.
“It’s a test of adaptability,” Stevens told business, union and community leaders today in the northern city of Brisbane. “While I’m very conscious that a number of sectors are really struggling with the exchange rate where it is, we shouldn’t wish too quickly for a low exchange rate.”
In Japan, a 20 trillion yen ($252 billion) package for rebuilding areas devastated by last year’s earthquake provides manufacturers a cushion against slowing overseas demand, while service industry hiring is aiding the labor market in South Korea.
“Asian economies are resilient, but the pace of the recovery overall is slowing,” said Kiichi Murashima, chief economist at Citigroup Global Markets Japan Inc. in Tokyo. “Some exports numbers are looking dull, meaning there is some impact from advanced countries’ economies, especially Europe.”
In a sign of constraints on the U.S. recovery, the Commerce Department is forecast to report that retail sales fell in May for the first time in a year, economists surveyed by Bloomberg News predict.
France, Germany and Spain may report consumer prices fell in May, according to Bloomberg News surveys before announcements today. Industrial production in the euro region probably contracted in April, according to a separate survey.
Machinery orders in Japan were 789 billion yen ($9.9 billion) in April, the highest level since October 2008, after a 2.8 percent fall the previous month. The timing of major orders can cause the results to be volatile.
A waning impact from post-quake reconstruction is projected to curb the Japan’s growth rate after gross domestic product jumped at an annualized 4.7 percent pace in January-to-March. The expansion is forecast at 2 percent this quarter, according to the median estimate of analysts surveyed by Bloomberg News.
The slowdown is at risk of worsening should Europe’s trauma deepen after Greek elections on June 17 that may determine whether that country remains in the euro region. Finance Minister Jun Azumi told Group of Seven counterparts June 5 that the yen’s appreciation is causing “serious damage” to the economy.
South Korea added 472,000 new jobs in May as retailers, social welfare, health care, and education services hired more workers, Statistics Korea said today in Gwacheon, south of Seoul.
President Lee Myung Bak said on June 11 that the country isn’t planning a supplementary fiscal program and while the year will be “very difficult,” the economy will probably grow more than 3 percent.