Production rose in May by the most since August, led by increases in automobiles and utilities and showing manufacturers are weathering the effects of the European debt crisis.
Figures from the Federal Reserve showed output at factories, mines and utilities increased 1.2% last month after a 0.7% gain in April. Plant use increased to the highest level since October 2008.
Manufacturers are leading the recovery from the worst recession since the 1930s as they replenish inventories, sell more goods abroad and invest in new equipment. A lack of inflation means the Fed has scope to keep the target interest rate near zero in coming months to maintain growth.
But figures from the Commerce Department showed housing starts fell 10% in May, the biggest decline since March 2009, to a 593,000 annual rate, after the expiration of a tax credit, indicating the real-estate market will struggle without government incentives.
Spending cuts by state and local governments from New York to California may act as a drag on the economy into 2011, only the second time in more than a half century that such reductions have restricted growth for three consecutive years.
States face a cumulative budget gap of US$127.4bil as 46 prepare for the start of their fiscal year on July 1. They will have to fill that hole largely on their own, as aid from the federal government under programmes including President Barack Obama’s US$787bil stimulus package starts to wind down.
Japan: Service demand rises for first time in three months
Demand for services rose for the first time in three months, a sign the economic recovery is spreading to households.
The tertiary index, which captures 63% of the economy, advanced 2.1% from March, the Trade Ministry said.
The report adds to evidence that the export-fuelled recovery is prompting consumers to spend.
Employers increased pay for a second month in April as they had staff work more hours to keep up with growing demand, and consumer spending rose in the first quarter.
The gains in paychecks are boosting consumer confidence, a sign that people may increase spending.
Household sentiment in May climbed to the highest level since October 2007 even as Europe’s debt woes roiled markets across the globe.
China: Leading indicator rises the most in 14 months
A leading indicator for China jumped by the most in 14 months, adding to signs that the world’s third-biggest economy is maintaining momentum as Europe’s debt crisis threatens to undermine the global recovery.
The measure gained 1.7% to 147.1 in April, compared with a revised 1.2% increase in March, the Conference Board said.
Singapore: Retail sales unexpectedly fall, led by cars
Singapore’s retail sales unexpectedly dropped for a second month as car purchases plunged, offsetting higher spending at department stores.
The retail sales index fell 2.6% in April from a year earlier, matching the decline in March, the Statistics Department said.
Excluding motor vehicles, retail sales rose 7.4% from a year earlier, after a revised 7% increase in March.
India: Inflation unexpectedly accelerates to 10.16%
India’s inflation unexpectedly accelerated in May, sending bond yields to the highest in almost one and a half months and mounting pressure on the central bank to raise borrowing costs.
The benchmark wholesale-price index advanced 10.16% from a year earlier after a 9.59% gain in the previous month, the Commerce Ministry said.
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