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Singapore

Economists' median growth forecast rises to 7.5%


Rosier estimate by 18 analysts is at mid-point of govt's range of 7% to 8%
By Erica Tay, Economics Correspondent

FORGET recent stock market woes and weak export numbers.
Projections by private-sector economists for Singapore's full- year economic growth have turned even rosier over the past three months. A quarterly survey of economists by the Monetary Authority of Singapore (MAS) threw up a median forecast of 7.5 per cent full-year growth, up from the 6 per cent in June's survey.


This puts the latest consensus view right in the middle of the Government's official 7 to 8 per cent forecast range. This month's findings were drawn from forecasts by 18 economists and analysts. According to the survey results out yesterday, half of those polled predict that economic expansion this year will come in between 7 per cent and 7.9 per cent.


Over a quarter of them are even more bullish, gunning for at least 8 per cent growth.
For the current quarter, the median forecast is for growth of 7.8 per cent year-on-year.
The upbeat predictions come after second-quarter economic growth strongly beat market forecasts.


Despite disappointing export numbers, economic growth in the April-to-June period came in at 8.6 per cent, when the consensus forecast was 6.1 per cent.


The overall performance was lifted by two star sectors - construction and financial services.
Compared to the previous poll, economists now expect the two sectors to chart significantly stronger growth for the year. The financial services sector is tipped to expand by a median 13.5 per cent this year, up from 10.2 per cent in the last survey.


Meanwhile, according to market consensus, construction would probably grow by 15 per cent this year, instead of the 10 per cent projected previously. Predictions for manufacturing, wholesale and retail trade, as well as private consumption, also turned more bullish, compared to three months ago. However, consensus forecasts for non-oil domestic exports and the hotels and restaurants business deteriorated.


Economists' median expectations for consumer price index (CPI) inflation were raised.
They also forecast a lower jobless rate. 'The CPI inflation forecast for 2007 rose to a median of 1.5 per cent, from the 1.2 per cent reported in the previous survey, while the outlook for the year-end unemployment rate edged down from 2.6 per cent to 2.5 per cent,' said the MAS survey report. Looking beyond this year, economists' median prediction for 2008 economic growth came in at 6.5 per cent, an improvement over 5.8 per cent in the previous poll.


Source: The Straits Times (Singapore)

US pending home sales plunge, layoffs surge

New data raises expectations the Fed will cut key interest rate

WASHINGTON -

PENDING sales of existing homes in the United States fell in July to their lowest level in nearly six years, as the mortgage market's troubles made it tough for many borrowers to finalise home purchases.


Planned layoffs by US companies surged 85 per cent last month, independent reports showed yesterday. Also, employers added jobs at the slowest pace in four years last month, according to yet another separate private report.


Together, the data raised expectations of a weak employment from the government and added to the view that the US Federal Reserve could lower its overnight benchmark interest rate at its Sept 18 monetary policy meeting.

The National Association of Realtors (NAR) said its index of pending home sales for July fell 16.1 per cent from a year ago and 12.2 per cent from the prior month.


Dow slides on weak data


STOCKS in the United States took an early tumble, after data showed a deterioration in the employment and housing markets.After three hours of trading, the Dow Jones Industrial Average was down 143.15 points, or 1.1 per cent, at 13,305.71. The Nasdaq Composite Index fell by 14.31 points to 2,615.93.


A reading of 100 is equal to the average level of pending sales activity in 2001, when the index began.


The fall was much bigger than the 2 per cent decline in the index economists were expecting for July and helped paint a bleaker picture of the housing market moving forward.
'It's difficult to fully account for mortgage disruptions in the index, and our members are telling us some sales contracts aren't closing because mortgage commitments have been falling through at the last moment,' the NAR's senior economist, Dr Lawrence Yun, said.
But he added that while some concerns remain, the market appears to have been stabilising since the middle of last month.


Mortgage market troubles played a big role in layoffs announced last month, which rocketed to 79,459 from 42,897 in July, according to Challenger, Gray & Christmas, an employment consulting firm.


Last month's job cuts were the highest since February, when they totalled 84,014.
Separately, a report from ADP and Macroeconomic Advisers showed that US private employers added 38,000 jobs last month, well below the 83,000 that analysts had expected and the slowest rate of growth in four years.


The bigger-than-expected decline in home sales in July led some analysts to believe that the Fed would be more likely to cut interest rates at its next meeting later this month.


ASSOCIATED PRESS, REUTERS