87655 Daily Economic News – April 23, 2014 AUTHORS Derek Chen (x-81602) Eung Ju Kim (x-85804) Gerard Kambou (x-32386) Portugal holds its first public debt auction since 2011 bailout…Eurozone business sentiment at a 35-month high…China’s flash manufacturing PMI rises to 48.3 in April Financial Markets Portugal’s government securities advanced on Wednesday, with benchmark 10-year yields sliding to an 8-year low, after the country sold €750 million of 10-year bonds at its first debt auction since a bailout in 2011. The new bonds came at an average yield of 3.575%, down sharply from the record 18.29% at the height of the euro-zone crisis in January 2012, and met with robust demand with a bid-to-cover ratio of 3.47 times. Portugal’s secondary-market 10-year yield fell as much as 8 basis points to 3.62%, the lowest level since February 2006. Developing-country stocks edged down to a one-week low amid signs of a slowing Chinese economy and growing tension in Ukraine. The benchmark MSCI Emerging Markets Index slid 0.3%, trimming year-to- date gains to 0.3%. China’s Shanghai Composite Index fell 0.3%, while the Hang Seng China Enterprise Index slumped 1.3%. Benchmark stock indexes in Russia and Ukraine fell 0.6% and 0.7%, respectively. In contrast, Thailand’s SET index gained 0.6% as the country’s central bank left its key interest rate unchanged, and India’s Sensex index climbed 0.5% to a record high at the close. High Income Economies Indicating a strong start to Q2, the flash reading of the Markit U.S. Manufacturing PMI was 55.4 in April, down fractionally from 55.5 in March. Sharper rates of output and new business growth boosted the index, while a rise in the suppliers’ delivery time component contributed negatively. Signaling improving sentiment, and accelerating expansion, the flash reading for the Eurozone PMI Composite Output Index improved from 53.1 in March to 54.0 in April, which is a 35-month high. The composite index encompasses the flash manufacturing PMI which edged up to 53.3 in April from 53.0 in March and the flash services PMI activity index that increased from 52.2 to 53.1, which is a 34-month 1 high. With the latest reading, there has been continuous expansion of business activity since last July, leading to a return to job creation across the region. In line with expectations, industrial output for Taiwan, China advanced 3.1% (y/y) in March, following a 6.8% jump in February. Manufacturing output increased 3.5% and gas and electricity output also advanced 1.0%. Meanwhile, mining and quarrying output declined 20.6%. On a three-monthly annualized basis, industrial output increased 0.6% (3m/3m saar) in March, following February ’s jump of 10.2%. Developing Economies East Asia and Pacific rd At its meeting of April 23 2014, Thailand’s central bank decided to leave its key policy rate unchanged at 2%, its lowest level since December 2010, after reducing it by 25 basis points in the previous meeting. In reaching this expected decision, the Monetary Policy Committee noted that the current monetary policy stance was appropriately supportive of the Thai economic recovery. China’s HSBC flash manufacturing purchasing managers ’ index rose in April but remained below the no- change 50 mark, which signals contraction. The preliminary HSBC manufacturing PMI came in at 48.3 in April, up from 48.0 in March. The manufacturing output sub-index rose from 47.2 in March to 48.0 in April, nearing a two-month high, marking some improvement in this area. However, new export orders, which posted an increase in March, contracted and the employment index also fell; while stocks of finished goods continued to expand but a slower pace. Sub-Saharan Africa South Africa’s consumer price inflation rose for the fourth consecutive month to 6.0% (y/y) in March, a six- month high, after increasing 5.9% (y/y) in February, reaching the upper limit of the central bank ’s target of 3%-6% for the year. Food and non-alcoholic beverage prices rose 7% (y/y) in March, the biggest increase since August 2013, as prices of vegetables accelerated. On a monthly basis, consumer prices rose 1.3% in March, the biggest monthly increase since June 2008 when prices rose 1.4%, following a 1.1% increase in February. You’ll find recent issues of this Daily and lots of other current ana lysis and high-frequency data on our GEM intranet website: http://go.worldbank.org/0TC32BNV30 See also our Prospects blog: http://blogs.worldbank.org/prospects The Daily Economic News is an informal briefing for Bank staff whose responsibilities require that they stay abreast of changes in global markets. The views expressed here do not reflect those of the World Bank Group. Feedback, and requests to be added to or dropped from the distribution list, may be sent to : dchen2@worldbank.org or gkambou@worldbank.org. 2