G7 Draft Says Global Economy Should Begin to Recover Later this Year

A draft of the G7 statement released Friday said the global economy should recover later this year, but noted there are some downside risks.

The statement released out of Washington, D.C. by finance ministers from the world's leading industrialized nations said there are some signs of economic stabilization appearing, and that the pace of economic decline is beginning to slow.

The seven nations -- France, Germany, Italy, Japan, United Kingdom, Canada and the United States -- pledged to act together to restore job growth and to prevent future economic meltdowns of the kind seen last year.

They also agreed to refrain from protectionist policies and barriers to investment.

Banks Have Adequate Capital but Buffers Needed, Stress Test Paper Shows

U.S. banks are adequately capitalized, but the Federal Reserve wants them to hold extra capital in case the economy deteriorates in the next two years, according to a paper addressing the design and implementation of the Fed's stress tests.

So far, bank reserves have been "substantially reduced," the Fed said, but added that nonetheless "most U.S. banking organizations currently have capital levels well in excess of the amounts required to be well capitalized."

Economists at Nomura were disappointed that few of the details were included and were unable to glean how the release of the results will unfold.

"Because the Fed provided little quantitative information in the report, it provided few hints into what the results might reveal. It is worth pointing out, however, that other estimates, for example those published by the IMF this week, indicate a substantial capital short-fall," they wrote in a research note.

U.S. Durable Goods Orders Fall Less Than Expected in March

Demand for big-ticket items in the U.S. dropped less than economists were expecting in March, according to the U.S. Department of Commerce. Durable goods orders excluding transportation posted a drop of 0.6% despite forecasts for a 1.2% decline. Total new orders fell by 0.8% against expectations of a 1.5% decline.

February's increase in the ex-transport figure was downwardly revised to a 2.0% gain from an initially reported 3.9% increase, while February's total new orders were revised to +2.1% from an originally reported 3.4% jump. Excluding defence, orders were down 0.6% following a revised 0.2% increase in the previous month.

U.S. New Home Sales Fall in March After Upward Revision to Previous Month

New home sales in the U.S. fell slightly in March due to a strong upward revision to the previous month's figure, the Department of Commerce reported.

New home sales fell to an annualized pace of 356k, a 0.6% decrease from February, the report said. The previous month's reading of 337k sales was revised up to 358k. Economists were expecting sales to remain unchanged in the month at 337k.

Inventories fell to a pace of 10.72, down from an 11.2-month supply in February. The median sale price of new houses fell to $201,400 in March from $208,700. Annually, prices have fallen 12.2%.

Canada Posts February Budget Surplus of C$823M

Canada has posted a February budget surplus of C$823 million, much lower than the C$3.02 billion surplus posted during the same month last year. The April-February surplus stands at C$1.32 billion vs. a year-ago surplus for the same period of C$12.63 billion.

UK First-Quarter GDP Falls at Fastest Pace in Nearly 30 Years

UK GDP growth surprised to the downside in the first quarter of 2009, suggesting that the current recession will be even deeper than initially expected.

According to advance estimates from the Office for National Statistics, overall economic activity in the UK contracted by 1.9%, its sharpest decline since Q3 1979. Expectations had been for a more modest decline of 1.5% following the 1.6% fall in Q4.

UK Retail Sales Surprise to the Upside in March

Increased sales at food stores was the main driver behind the unexpected growth in UK retail sales in March, the Office for National Statistics reported. According to the ONS, UK retail sales ticked up 0.3% in March after falling 2.0% in February.

The rise was driven by "increases in all sectors except household goods stores and other non-food stores," the statistics office said. Expectations had been for a further decline of 0.3%, while February's figure was revised down from an initial estimate of -1.9%.

By Ernest Hoffman, This email address is being protected from spam bots, you need Javascript enabled to view it and Stephen Huebl, This email address is being protected from spam bots, you need Javascript enabled to view it , with contributions from Megan Ainscow, This email address is being protected from spam bots, you need Javascript enabled to view it and Todd Wailoo, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Sarah Sussman, This email address is being protected from spam bots, you need Javascript enabled to view it

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