IMF upgrades global growth outlook again as some COVID clouds begin to clear - Reuters News

April 6 (Reuters) - The International Monetary Fund raised its outlook for global economic growth again on Tuesday, forecasting worldwide output would rise 6% this year, a rate unseen since the 1970s, thanks largely to the unprecedented policy responses to the COVID-19 pandemic.

That upgrade, from 5.5% less than three months ago, largely reflects a rapidly brightening outlook for the U.S. economy, which the IMF now sees growing by 6.4% in 2021, the fastest since the early 1980s. That's up 1.3 percentage points from the IMF's 5.1% projection in late January and nearly double the rate it estimated in October.

The IMF forecast, if realized, would mark the fastest pace of global growth since 1976 but also comes off the steepest annual downturn of the post-war era last year as the pandemic brought commerce around the world to a near stand-still at times. The fund said the world economy contracted 3.3% in 2020, a modest upgrade from an estimated contraction of 3.5% in its January update.

The latest World Economic Outlook - released at the start of the IMF's and World Bank's spring meetings - reflects a dramatic divergence between the outlook for the United States and much of the rest of the world courtesy of another $1.9 trillion in pandemic relief spending recently enacted in Washington.

The outlooks for other advanced economy heavyweights, such as Germany, France and Japan, hardly improved at all since January. Nonetheless, with the heft of the U.S. outlook improvement as the main driver, the IMF marked up its advanced economy growth estimate to 5.1% from 4.3%. (Full Story)

Forecasts for emerging market economies, while somewhat improved, took a back seat to their developed peers. The fund's outlook for EM economies rose by just 0.4 percentage point - half of the advanced economy mark-up - to 6.7% from the view in January.

"(M)ultispeed recoveries are under way in all regions and across income groups, linked to stark differences in the pace of vaccine rollout, the extent of economic policy support, and structural factors such as reliance on tourism," the IMF said in its report summary.

The United States economy this year will join China in regaining a level of gross domestic product that exceeds where it stood before the pandemic struck just over a year ago, the IMF said. China recaptured all of its lost growth by the end of 2020.

The IMF emphasized the high degree of uncertainty surrounding the outlook, and that improvements could easily be tripped up by any of several factors, with success against the pandemic topping the list.

"Greater progress with vaccinations can uplift the forecast, while new virus variants that evade vaccines can lead to a sharp downgrade," it said.

Another big risk centers around the persistence of accommodative policies, from the United States in particular. Long-term interest rates around the world have risen sharply since January, as market participants revise their expectations for how soon the U.S. Federal Reserve begins to normalize its policy stance.

U.S. job openings rise to 7.367 million in Feb - Reuters News

Apr 6 (Reuters) - U.S. Labor Department report of job openings and labor turnover, seasonally adjusted.

(r)Revised
(1)Job openings reflect the number of openings on the last business day of the month. The rate is as a percent of total employment plus job openings. (2)Hires are the number of hires during the entire month. The rate is as a percent of total employment. (3)Separations are the number of quits, layoffs, discharges and other separations during the entire month. The rate is as a percent of total employment. (4)Quits are the number of quits in the entire month. The rate is a percent of total employment.

China's services sector recovery accelerates in March - Reuters News

BEIJING, April 6 (Reuters) - A recovery in China's services sector picked up speed in March as firms hired more workers and business optimism surged, although inflationary pressures remained, a private sector survey showed on Tuesday.

The Caixin/Markit services Purchasing Managers' Index (PMI) rose to 54.3, the highest since December, from 51.5 in February, well above the 50-mark that separates growth from contraction on a monthly basis.

Firms reported the sharpest increases in activity and overall sales in three months. New export business continued to contract but at a slower pace.

A sub-index for employment rose back into positive territory as businesses hired more workers than they laid off, the survey showed.

The findings were largely in line with an official survey released last week. (Full Story)

Chinese authorities successfully curbed domestic transmissions of COVID-19 virus over the winter, leading to quarantine restrictions and testing requirements being scaled back.

"The Covid-19 flare-ups that occurred in the fall and the winter have basically died down, and the services sector has quickly recovered with supply and demand expanding," said Wang Zhe, senior economist at Caixin Insight Group, in a statement accompanying the data release.

But rising input costs and output prices shown by surveys of both the services and manufacturing sectors are not conducive to a sustained post-epidemic recovery, he said.

Costs for services firms continued to grow, according to the survey, although at a slower pace than the month before. Companies raised their prices charged for the eighth month in a row and by the largest amount so far this year.

Chinese services firms were highly optimistic about the year ahead, with business expectations rising to the highest level since 2011.

The services sector, more vulnerable to social distancing restrictions, had been slower to recover initially from the pandemic than the industrial sector.

Domestic COVID-19 cases have largely been controlled in China although a city on the border with Myanmar last week ordered home quarantines and mass testing after new cases emerged. (Full Story)

Analysts expect a strong rebound in China's full-year growth.

Caixin's composite manufacturing and services PMI, also released on Tuesday, rose to 53.1 in March, from 51.7 the previous month.

Euro zone unemployment unchanged in February - Reuters News

BRUSSELS, April 6 (Reuters) - Euro zone unemployment was unchanged in February compared to an upwardly revised reading for January, data showed on Tuesday, as European furlough schemes limited the impact of the second wave of the pandemic in the fourth quarter on jobs.

The European Union's statistics office Eurostat said the jobless rate in the 19 countries sharing the euro was 8.3% in February, unchanged from the revised data for January.

"The unemployment rate now shows a tiny second wave effect as January is now reported to have seen a small tick up in unemployment from 8.2 to 8.3%," said Bert Colijn, euro zone economist at ING bank.

"While the curve has changed a bit, it hardly changes the picture. Given the contraction in activity and the long closures of certain sectors, the second wave labour market impact remains mild," he said.

Eurostat numbers showed the number of people without jobs in the euro zone in February rose to 13.571 from 13.523 in January.

"How the labour market performs when the economic rebound starts remains a big question. A quick bounce back is unlikely given how employment usually recovers from a recession but also because furlough schemes still need to be wound down," he said.

Euro zone investor morale rises in April to highest since Aug 2018 - Reuters News

BERLIN, April 6 (Reuters) - An investor morale index in the euro zone rose in April to the highest level since August 2018, driven by an improved view of the current situation, a survey showed on Tuesday.

Sentix's index for the euro zone climbed to 13.1 from 5.0 in March. A Reuters poll had pointed to a reading of 7.5.

An expectations index climbed to a record 34.8 from 32.5 in March, while the current situation index improved to -6.5 from -19.3 in March.

Sentix said that new lockdown measures are having surprisingly little effect on the overall economic recovery.

"Investors are basing their expectations on accelerated vaccination success across the European Union," it said.

Sentix surveyed 1,156 investors from April 1 to April 3.