PP 7767/09/2010(025354)

Economic Highlights
Global
•MARKET DATELINE

5 April 2010

1 US Job Market Began To Benefit From A Recovery In

The Economy

2 Global Manufacturing Activities Rebounded In March

3 India’s Exports Strengthened In February

4 Thailand’s Inflation Eased In March

Tracking The World Economy...

Today’s Highlight

US Job Market Began To Benefit From A Recovery In The Economy

US unemployment rate held stable for the third consecutive month at 9.7% of total labour force in March, the same level
as in February and after hitting a peak of 10.1% in October. This suggests that the worst of the unemployment situation
might have been over, though the improvement in job market remains gradual. Indeed, non-farm payrolls added 162,000
jobs in March, the third month of increase in five months and compared with a loss of 14,000 in February. This was
due to a pick-up in jobs in the manufacturing sector, which added another 17,000 jobs in March, after a gain of 6,000
jobs in February, while construction sector turned around to record an increase in jobs during the month. These were
aided by a pick-up in jobs in services industry, which recorded an increase of 82,000 jobs in March, compared with a
rise of 55,000 jobs in February. This was the fourth month of jobs gain in five months, mainly on account of a pick-
up in jobs in trade & transport, education & healthcare and leisure & hospitality sectors, while the government sector
turned around to record an increase in jobs during the month. These were aided by a pick-up in the employment of
temporary workers in business services, which increased by 40,000 in March, the sixth straight month of increase and
compared with a rise of 37,000 jobs in February. These were, however, offset partially by sharper declines in jobs in
information and financial services sectors. As a whole, a gradual improvement in the job market will provide some
support for consumer spending and contribute to a sustained recovery of the US economy. Already, private consumption
expenditure strengthened to an annualised rate of 3.1% in February, from +1.9% in January.

Global Manufacturing Activities Rebounded In March

X The global Purchasing Managers Index (PMI) for the manufacturing sector, an index compiled by JP Morgan and
Markit Economics in London, rebounded to 56.7 in March, from 55.4 in February. Readings above 50 indicate
the sector is expanding while readings below 50 denote contraction. This suggests that global manufacturing
activities continued to expand and at a faster pace during the month, as workers returned to work after a holiday
break. The pick-up was reflected in stronger growth in output and new orders. As a result, manufacturers
increased their recruitment for the third consecutive month in March, in anticipation of a pick-up in demand given
an improvement in global economic prospects. Similarly, input prices rebounded during the month, pointing to an
upward price pressure. Stronger manufacturing activities were reflected in a pick-up in activities in the US,
Euroland and China, while activities in Japan and India moderated somewhat. As a whole, global manufacturing
activities showed stronger growth in 1Q 2010, suggesting that global economic activities will likely continue
to expand during the quarter, after picking up momentum in the 4Q.

Peck Boon Soon

(603) 9280 2163
Please read important disclosures at the end of this report.
bspeck@rhb.com.my

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 5 April 2010

Asian Economies

India’s Exports Strengthened In February

X India’s exports strengthened to 34.8% yoy in February, from +11.5% in January and +9.3% in December.
This was the fourth straight month of increase due partly to a lower base effect and partly to a recovery in global
demand for India’s exports. Faster exports growth will likely boost production and help sustain the country’s
economic expansion in 1Q 2010, after recording a slower growth of 6.0% yoy in the 4Q. In a move to promote
exports, India’s Finance Minister extended the interest rate subsidy of 2% to more exporters in the budget
presented on 26 February, including handicrafts, carpets and handlooms exporters. Similarly, imports strengthened
to 66.4% yoy in February, from +35.5% in January. This was the third straight month of picking up, pointing to
an improvement in domestic demand.

Thailand’s Inflation Eased In March

X Thailand’s inflation rate eased to 3.4% yoy in March, from +3.7% in February and +4.1% in January. This
was the second consecutive month of easing, suggesting that price pressure has eased somewhat. The
moderation in inflation rate was due to a slowdown in prices of non-food items, which eased to 2.8% yoy in March,
from +2.9% in February and from +4.7% in January. This was mainly on account of slower increases in the costs
of medical care and transportation, while the prices of clothing and the costs of recreation & education remained
stable. These were aided by a slowdown in food prices, which moderated to 4.4% yoy in March, from +5.1% in
February. The moderation in inflation rate will provide more room for the Bank of Thailand to hold its key policy
rate stable, though it has indicated that it will select the right timing to reduce stimulus measures, as the economic
recovery has gathered strength and there is less necessary to keep interest rates low. The central bank left its
key policy rate unchanged at a 5-year low of 1.25%.

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