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The Bank of Japan said the nation’s worst recession since World War II is easing after exports improved and industrial output rose the most in 56 years.

“Japan’s economic conditions, after deteriorating significantly, have begun to stop worsening,” the bank said in a statement in Tokyo today, after leaving the overnight lending rate at 0.1 percent. “In the coming months, Japan’s economy is likely to show clearer evidence of leveling out over time.”

Governor Masaaki Shirakawa may signal later today that it’s too soon to consider unwinding the bank’s policies of buying corporate debt and providing lenders with ample funds because the economy remains fragile. The yen rose, worsening the outlook for exporters, and stocks slumped the most in more than two months on concern a global recovery may be delayed.

“The BOJ is still cautious about the prospects for the economy and is still far away from an exit,” said Masaaki Kanno, chief economist in Tokyo at JPMorgan Chase & Co., who used to work at the central bank.

Japan’s currency gained 1.6 percent to 96.27 per dollar at 3:41 p.m. in Tokyo from 96.84 late yesterday. The Nikkei 225 Stock Average slumped 2.9 percent, the biggest drop since March 30, as a report on New York manufacturing damped optimism for a U.S. recovery.

The central bank said there are “continued high downside risks” facing Japan, citing developments in domestic and global financial conditions and the world economy.

G-8 Finance Ministers

Finance ministers from the Group of Eight nations said over the weekend that they need to begin considering how to roll back policies to counter the financial crisis as their economies show signs of recovering.

Atsushi Mizuno, a Bank of Japan board member, last month said central banks need to discuss how to “exit” their unconventional policy measures even though the global economy is still in a slump.

Since lowering the key rate to 0.1 percent in December, the central bank began to buy commercial paper and corporate bonds from lenders to channel cash to companies. It has also offered to lend to commercial banks limitlessly in exchange for sufficient collateral. The programs expire on Sept. 30.

Shirakawa will speak to the press at 3:30 p.m. in Tokyo.

Investor optimism that the economy is recovering has spurred an increase in government bond yields. The yield on Japan’s benchmark 10-year bond fell 2.5 basis points to 1.475 percent as of 1:08 p.m. in Tokyo. It reached an eight-month high of 1 payday advance loans.56 percent on June 11.

Long-Term Rates

Rising long-term interest rates would boost borrowing costs for companies and consumers, threatening to quash the global economy’s budding rebound.

“If the Bank of Japan and other central banks want to lower long-term interest rates, they could say it’s too soon to think about an exit,” said Hiromichi Shirakawa, chief economist at Credit Suisse Group AG in Tokyo, who is a former central bank official. He’s not related to the governor.

Reports since the first quarter, when gross domestic product shrank a record 14.2 percent, suggest the nation is rebounding from its worst recession since World War II.

Industrial production climbed 5.9 percent in April from a month earlier, the biggest gain since 1953. Exports have improved two months running and bankruptcies fell in May for the first time in a year. Both the central bank and the government last month raised their evaluations of the economy for the first time since 2006.

Replacing Inventories

Shirakawa has said the rebound is being driven by inventory replacements and fiscal measures and the bank’s focus is on whether the economy can keep growing should the labor market and wages deteriorate further.

“With inventory adjustments having proceeded both at home and abroad, economic activity will be greatly influenced by developments in final demand,” the bank said. It reiterated a forecast for the world’s second-largest economy to start recovering sometime between October and March at the earliest.

A lack of interest in the bank’s programs indicates lenders are able to borrow from financial markets, analysts say. For the first time, no lenders bid to sell their commercial- paper holdings to the central bank last week. Bids for the bank’s corporate bond purchases have also failed to reach offered amounts since the program began in March.

Sony Corp. last week sold the biggest amount of bonds in its history while Toyota Motor Corp. plans to increase debt sales from the initially planned amount.

Even so, the central bank will probably extend corporate operations beyond Sept. 30 “as a safety net,” said Mari Iwashita, chief market economist at Daiwa Securities SMBC Co. in Tokyo. Policy makers may also consider increasing the bank’s monthly government bond purchases from 1.8 trillion yen ($18.4 billion) should financial-market turmoil re-emerge, she said.

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Australia’s central bank didn’t see a pressing case to cut interest rates from a 49-year low two weeks ago, saying the effects of previous reductions and government spending will take time to emerge.

“Maintaining the current stance of monetary policy for the time being would be consistent with fostering sustainable growth and low inflation,” policy makers said in minutes of the bank’s June 2 meeting released in Sydney today.

Reserve Bank Governor Glenn Stevens left the overnight cash rate target at 3 percent for a second month ahead of a report showing Australia joined China and India as one of the few economies to expand last quarter. The central bank has scope for “some further easing of monetary policy if that were needed” to spur growth, according to the minutes.

The minutes confirm “an easing bias, but the details hint at a Reserve Bank that has shifted to the sidelines for the foreseeable future,” said Su-Lin Ong, senior economist at RBC Capital Markets Ltd. in Sydney. “We think the cash rate has troughed.”

The Australian dollar rose to 79.19 U.S. cents at 12:21 p.m. in Sydney from 78.92 cents before the minutes were released. The yield on the two-year government bond gained 1 basis point to 3.78 percent. A basis point is 0.01 percentage point.

Reports published since the meeting showed employers fired fewer workers than estimated in May, consumer confidence jumped the most in 22 years, business sentiment had the biggest gain since 2001 and home-loan approvals rose for a seventh month.

Economy Grows

Gross domestic product unexpectedly grew 0.4 percent in the three months through March 31 after contracting 0.6 percent in the fourth quarter, the government reported on June 3. Economists forecast a 0.2 percent decline.

While Australia’s economy is experiencing a “downturn,” there are signs it is “less severe than in most other countries,” the minutes said. “The outlook was for a fairly gradual expansion getting underway later in the year, with spare capacity tending to increase and inflation tending to decline.

“Recent information had not led to any downward revision to the outlook; if anything, some indicators had been on the stronger side,” the bank said.

To cushion the economy against the worst global slump since the Great Depression, Stevens cut the overnight cash rate target by a record 4 cash til payday loans.25 percentage points between September and April.

Scope to Cut

The government in February also began distributing more than A$12 billion ($9.5 billion) in cash handouts to consumers. Treasurer Wayne Swan said last month he will spend another A$22 billion on roads, railways, schools and ports.

“Indications were that these policies were having some impact, though the full effects would take time yet to be seen,” the minutes said. The bank’s current policy setting also leaves “adequate flexibility to respond to developments as needed over the period ahead.”

Speculation that Stevens will raise interest rates over the coming 12 months climbed last week on signs the economy is strengthening, according to a Credit Suisse Group AG index.

Investors expect Stevens and his board to raise the benchmark interest rate by 58 basis points in the next 12 months, the index showed at 12:18 p.m. in Sydney. At the start of June, traders tipped 3 basis points of cuts. The index was unchanged after today’s minutes were published.

Rising Currency

“People are jumping to pretty aggressive rate hikes by the first half of 2010, and I don’t think that’s what the Reserve Bank are thinking of at the moment,” said Brian Redican, a senior economist at Macquarie Group Ltd. in Sydney.

Today’s minutes suggest “rates won’t rise anytime soon,” Redican said. And “they are still reiterating that they can cut rates further if the economy needs it.”

The Australian currency’s recent appreciation, particularly against the U.S. dollar, has “reduced the stimulus to the economy coming from the earlier depreciation,” today’s minutes said.

Australia’s dollar climbed about 7 percent against a trade- weighted basket of currencies in the month prior to the June 2 meeting, the Reserve Bank said.

Much of the increase came during offshore trading sessions, suggesting that currency movements reflected “changes in sentiment toward the U.S. dollar and risk appetite more generally, rather than any specific reassessment about Australia’s economic prospects,” the minutes said.

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Manufacturing in the New York region this month contracted at a faster pace as sales and inventories declined, showing the economy is still months away from a sustained recovery.

The Federal Reserve Bank of New York’s June general economic index fell to minus 9.4, less than forecast, from minus 4.6 the prior month, the bank said today. Readings below zero for the Empire State index signal manufacturing is shrinking.

U.S. companies are likely to keep cutting stockpiles until sales improve, indicating orders and production will be restrained. The New York Fed’s factory gauge of the outlook for the next six months climbed to the highest level in almost two years as the drawdown in goods on hand clears the way for factories to ramp up output in coming months.

“The road to recovery in manufacturing is going to be long and gradual,” said Ryan Sweet, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania. “At some point manufacturers will cut inventories to below final demand and that will set the stage for a recovery in production.”

Stocks extended losses following the report and Treasury securities rose. The Standard & Poor’s 500 index was down 1.4 percent to 932.82 at 9:40 a.m. The yield on the 10-year Treasury note decreased to 3.72 percent from 3.79 percent late on June 12.

Less than Forecast

Economists projected the Empire State index would hold unchanged at minus 4.6, according to the median of 43 estimates in a Bloomberg News survey. Forecasts ranged from 5 to minus 8.1.

The International Monetary Fund today raised its outlook for the U.S. and called for steps to reduce concern about rising public debt and inflation. The lender forecasts the world’s largest economy will contract 2.5 percent this year before expanding 0.75 percent in 2010. In April, the IMF projected the economy would contract 2.8 percent this year.

International holdings of long-term U.S. financial assets, a haven for investors during the global financial crisis, rose at a slower pace in April as China, Japan and Russia trimmed their holdings of Treasuries, the government also reported today. Total net purchases of long-term equities, notes and bonds rose a net $11.2 billion, compared with buying of $55.4 billion in March.

Growing Optimism

Factory executives in the New York Fed’s district, which encompasses New York state, northern New Jersey and one county in Connecticut, turned more optimistic about the future. The gauge measuring the manufacturing outlook climbed to 47.8, the highest level since July 2007, from 43.8.

The New York Fed’s measure of new orders increased to minus 8 car insurance.2 from minus 9 and a gauge of shipments fell to minus 4.8 from 1.3. The index of inventories decreased to minus 25.3 from minus 21.6.

The index of prices paid increased to minus 5.8 from minus 11.4, and the gauge of prices received rose to minus 12.6 from minus 27.3. A measure of employment improved to minus 21.8 from minus 23.9.

The headline New York Fed survey number conveys the general impression of executives on whether activity is increasing or decreasing, and isn’t a composite of the other readings.

‘Disappointing’ Reading

Although the main reading was “disappointing from the perspective of the stabilization story, the details of the report were not as weak as the headline,” John Ryding, chief economist at RDQ Economics in New York, wrote in a note to clients.

Today’s report is one of the earliest measures of regional manufacturing this month. The Philadelphia Fed report, due June 18, may show manufacturing in that region contracted at a slower pace in June, according to the Bloomberg survey median.

Regional and national purchasing manager surveys have shown a declining rate of contraction in recent months, one sign the worst of the manufacturing slump may have passed. Still, General Motors Corp. and Chrysler LLC’s plant closings as part of their bankruptcy reorganizations portend the auto industry will weaken further before it gets better.

Economists surveyed by Bloomberg News June 1 to June 8 projected the U.S. economy would grow at an average 1.2 percent pace in the second half of the year after falling by 2 percent in the second quarter. They also estimated the jobless rate will climb to 10 percent by the end of the year.

Signs of Improvement

Some companies, particularly technology and industrial- materials firms, are seeing signs the outlook is improving.

Armonk, New York-based International Business Machines Corp. last month said it’s “ahead of pace” to meet its 2010 earnings forecast.

Alcoa Inc., the largest U.S. aluminum producer, said May 29 that distributors of the lightweight metal are showing renewed buying interest and will generate a “giant sucking sound” of demand when the global economy revives.

Distributors “know if the green shoots turn over to become demand, they will not be able to supply,” Alcoa Chief Executive Officer Klaus Kleinfeld said at a presentation in New York. “The distribution chain will generate this giant sucking sound of demand.”

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Reports on manufacturing and housing this week will probably offer evidence that the recession- stricken U.S. economy is within months of hitting bottom, economists said.

A 1 percent drop in industrial production in May, based on the median of 68 estimates in a Bloomberg News survey, was due mainly to auto-industry shutdowns that swamped gains elsewhere, analysts said. Other reports may show builders began work on more houses as sales steadied and consumer prices rose.

The fallout from bankruptcies at Chrysler LLC and General Motors Corp. is likely to reverberate through the industry and the economy in coming months, even as other areas stabilize. Plunging home prices, near-record low mortgage rates and tax credits for first-time buyers may help bring an end to the worst residential construction slump in seven decades.

“With Chrysler closing and GM downsizing, it’s going to be pretty ugly,” said Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania. Still, “we’re in the process of hitting the trough of the recession, which we’ll probably see within the next few months.”

A decrease in the Federal Reserve’s production figures, due June 16, would be the 16th in the last 17 months. The report is also projected to show the proportion of plant capacity in use probably dropped to 68.4 percent, the lowest since records began in 1967, according to the survey median.

Plant Shutdowns

Chrysler shut all its plants on May 1 to clear as many unsold vehicles as possible from dealer lots while it restructures. The sale of most of Chrysler’s assets to a group led by Italian automaker Fiat SpA was completed last week.

GM, the biggest U.S. automaker, said June 1 it is stopping work at 14 plants as it restructures under Chapter 11.

General Electric Co. is among companies starting to see some improvement in economic conditions. Chief Executive Officer Jeffrey Immelt said at a conference last week that government efforts to thaw credit are starting to pay off, making it easier for companies to borrow.

“Capital markets have largely healed,” Immelt said. “As a company you have to invest now. You have to invest when things are darkest.” Immelt predicted the economic recovery will be slower than that following the 1982 recession, the last slump that approached the severity of the current downturn cash loans for bad credit.

One positive aspect of the excess in capacity is that it will help control inflation should raw-material costs keep rising, economists say. Consumer prices probably rose 0.3 percent in May as gasoline prices climbed, according to the survey median before a Labor Department report on June 17.

Less Inflation

Core consumer prices, which exclude food and energy, rose 0.1 percent in May after a 0.3 percent gain the prior month, according to the survey.

“The slack in resource utilization remains sizable, and, notwithstanding recent increases in the prices of oil and other commodities, cost pressures generally remain subdued,” Fed Chairman Ben S. Bernanke told Congress on June 3. “We anticipate that inflation will remain low.”

Concern over the amount of money the Fed has pumped into financial markets and the size of upcoming government security auctions to pay for stimulus efforts has caused interest rates on Treasuries to shoot higher in recent weeks.

The yield on the benchmark 10-year note reached 3.95 percent at the close on June 10, after being as low as 2.54 percent on March 18, the day the Fed announced it would buy Treasury securities in a bid to push borrowing costs down.

Housing Steadies

The housing recession that triggered the credit crisis and global slump is showing signs of bottoming as sales and construction have stabilized near historically low levels.

A Commerce Department report on June 16 may show housing starts last month rose 5.9 percent to a 485,000 annual pace from the prior month’s five-decade low, while permits rose to 509,000 from the prior month’s record low of 498,000.

Builders are still hurting after having to mark down prices in an effort to spur demand. Toll Brothers Inc. and Hovnanian Enterprises Inc. last week both reported their second-quarter losses exceeded analysts’ estimates.

“There is no question we’ve come down a pretty steep hill,” Michael Feder, chief executive officer of Radar Logic Inc., a research and analytics company that tracks home prices, said in a Bloomberg Television interview on June 10. Still, stabilization in home values in recent months is “in great contrast to last year,” he said.

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The Federal Reserve’s mortgage- buying program to bolster housing demand by lowering fixed interest rates is losing effectiveness at a time of the year when sales of U.S. real estate traditionally peak.

The CHART OF THE DAY shows the Fed’s influence on rates has waned over the course of bond buying that more than doubled purchases in three weeks or less. The first effort, in March, drove rates to a record low. After the last, they rose to a 2009 high. The figures shown exclude sales of bonds.

“The government played chicken with the bond market and it lost,” said Randy Johnson, president of Newport Beach, California-based Independence Mortgage Co. “If they were able to keep it up long enough, the housing market would heal and the rest on the economy could start its recovery. What has happened, however, is that the bond market called their bluff.”

The Fed is buying securities issued by Fannie Mae, Freddie Mac and Ginnie Mae to lower home financing costs and stimulate the economy. The bond purchases of $120 absolutely free credit report.4 billion over two weeks in early March helped lower the average U.S. 30-year fixed rate to 4.78 percent, the lowest since the 1950s. After the next purchases, of $190.5 billion of mortgage securities between March 19 and April 8, rates were the second-lowest on record.

The Fed then bought $175 billion of bonds from April 16 to May 6, up from $30.4 billion during the seven days ended April 15. The result: rates jumped almost half a percentage point to 5.59 percent this week, the highest of the year, according to Freddie Mac. Gross purchases from June 4 through June 10 were $54.7 billion, up from $27.7 billion last week.

Pending sales measuring the number of buyers who sign contracts to purchase previously occupied homes have peaked every June for the last four years, according to the National Association of Realtors.

(To save a copy of the chart, click here.)

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Orders for Japanese machinery fell to a 22-year low and producer prices tumbled the most since 1987 as dwindling profits forced companies to cut costs amid the worst postwar recession.

Bookings, an indicator of capital investment in the next three to six months, fell 5.4 percent to 688.8 billion yen ($7.1 billion) in April, the lowest since 1987, the Cabinet Office said today in Tokyo. Wholesale prices, the costs companies pay for energy and raw materials, slid 5.4 percent in May from a year earlier, the Bank of Japan said.

The collapse in global demand has forced manufacturers to cut production by more than a third from last year’s peak. Companies aren’t ready to start spending again as plunging profits force them to cut workers and salaries, damping the prospect of a rebound in the world’s second-largest economy.

“Companies aren’t willing to increase investment because the recovery in demand is slow,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “The economy will probably return to growth this quarter, but it may be temporary because capital investment and consumer spending are slow to recover.”

The yen traded at 97.53 per dollar at 11:30 a.m. in Tokyo from 97.46 before the reports were published. Shares of machinery makers were mixed, with Fanuc Ltd. and Advantest Corp. declining, while Tokyo Electron Ltd. advanced. The Nikkei 225 Stock Average rose 1 percent to 9,885.13 at the morning close in Tokyo.

Demand in China

Reports released in the past month suggest gross domestic product may grow this quarter, after plummeting at a record 15.2 percent pace in the first three months of the year. Japan’s manufacturers have gotten a lift from revived demand in China, where the government is spending $586 billion on roads, hospitals and low-cost housing. Exports and production rose in March and April on a month-on-month basis.

Still, only about half the nation’s factory capacity is being used, putting pressure on managers to cut costs and delay investments.

A survey published this week by the Nikkei newspaper showed that Japanese companies plan to cut capital spending by an unprecedented 15 approved payday advance.9 percent this business year. The previous record was an 11.8 percent decline that came in 1993 when the bursting of Japan’s asset bubble left companies saddled with plant and equipment they no longer needed.

Output Decline

Jet-engine maker IHI Corp. said last week order delays from airlines have forced the company to slash production of parts for Airbus SAS and Boeing Co. The Tokyo-based company, which forecasts output will fall this year by 20 percent from 2007 levels, says it will delay investments in production capacity for as long as four years.

Postponed investments and a weak global demand are causing prices to fall and some economists say the economy has already slipped into deflation.

“Though we are recently seeing some signs of an economic recovery, we should assume price declines will worsen in coming months,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo. “Japan is already in deflation.”

Expectations of lower prices ahead may prompt companies and consumers to delay purchases, eroding profits and forcing firms to cut wages. Consumer prices excluding fresh food, the central bank’s key gauge of inflation, fell for a second month in April.

Toyota Motor Corp. estimates it will sell only 7.3 million vehicles this year, less than the 10 million it has the capacity to build. The company, expecting its second year of losses, will cut capital spending this year by 36 percent, according to the Nikkei.

Cost Cuts

Cost cuts by Toyota and other companies including television-maker Sharp Corp., which is closing older factories that produce screens for mobile phones, may limit the scope of Japan’s rebound, according to former Economic and Fiscal Policy Minister Hiroko Ota.

“More layoff and investment cuts could mean the economy falls back into negative growth,” Ota said last week.

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Philippine exports fell for a seventh month in April as the global economic slump slashed electronics demand.

Overseas sales dropped 35.2 percent from a year earlier to $2.8 billion, the National Statistics Office said in Manila today. The median forecast of 9 economists surveyed by Bloomberg News was for a 34.4 percent decline. Exports fell 30.8 percent in March.

“It is in line with the general lethargy in demand for consumer electronics,” said Radhika Rao, an economist at Ideaglobal Ltd. in Singapore. Philippine exports “will turn around only when there’s actual recovery in consumption spending,” she said.

The government, which will review its economic targets today, may cut the 2009 growth estimate a third time, Economic Planning Secretary Ralph Recto said yesterday. The worst global recession since the Great Depression has hurt exports by Intel Corp. and other manufacturers in the Philippines, dragging first-quarter growth to 0 health insurance.4 percent, the weakest in a decade.

Shipments of electronics, which account for more than half of Philippine exports, dropped 33 percent in April to $1.68 billion.

Exports made up about a third of the Philippines’ gross domestic product last year. The government currently predicts the economy will expand at least 3.1 percent in 2009.

“Their forecasts were on the bullish end since the start of year, even when they revised,” said Rao, who predicts economic growth of 2.5 percent this year.

Global semiconductor sales fell 25 percent to $15.6 billion in April from a year earlier, according to the San Jose, California-based Semiconductor Industry Association. Full-year sales may drop 21 percent, the group predicts.

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German exports fell more than economists forecast in April as the global crisis restrained demand, keeping Europe’s largest economy mired in a recession.

Sales abroad, adjusted for working days and seasonal changes, fell 4.8 percent from March, when they rose a revised 0.3 percent, the Federal Statistics Office in Wiesbaden said today. Economists expected a 0.1 percent decline in April, according to the median of 10 estimates in a Bloomberg News survey.

“The world is still adjusting to the burst of the credit boom and this kind of hangover won’t be gone in a couple of months,” said Thorsten Polleit, chief German economist at Barclays Capital in Frankfurt. “The global economy is still lackluster.”

German companies from chemical makers to car manufacturers have seen demand fall as the global economy contracts. While Bundesbank President Axel Weber said June 5 that central bank policy has helped to slow the pace of the economic slump, the outlook “remains uncertain.” Volkswagen AG’s Audi division said yesterday it may need to push back a 2015 sales target as customers withhold purchases of luxury vehicles no teletrak payday loan.

German imports dropped 5.8 percent in April from the previous month, when they increased a revised 0.2 percent, the statistics office said. The trade surplus narrowed to 9.4 billion euros ($13.1 billion) from 11.3 billion euros.

The surplus in the current account, the measure of all trade including services, was 5.8 billion euros, down from a revised 11.0 billion euros.

The European Central Bank has cut its key interest rate to a record low of 1 percent and pledged to buy 60 billion euros of covered bonds starting next month in an effort to revive lending. President Jean-Claude Trichet said on June 4 that he expects the slump in the euro-area economy to ease in the current quarter after a “sharp fall in global demand and trade” affected the region in the first quarter.

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President Barack Obama, trying to bolster an economy he says still has a “long way to go,” announced 10 projects aimed at creating or saving more than 600,000 jobs, according to the administration.

The plans are meant to boost the effectiveness of a $787 billion stimulus measure sought by Obama and approved by Congress in February. The projects will be a key focus of recovery efforts during the next three months and create or save four times more jobs than during the first 100 days since the rescue bill became law, according to a White House news release.

“We have a long way to go on our road to recovery but we are going the right way,” Obama said in a statement. “Our measure of progress is the progress the American people see in their own lives. And until that progress is steady and solid; we’re going to keep moving forward.

The new projects are being framed as the beginning of a “summer of accelerated Recovery Act activity” by the administration and include new services at health centers in 50 states, work on 107 national parks, improvements at airports, highway locations and veterans’ medical facilities. They will also provide funding for schools to hire more teachers.

White House officials said yesterday they are encouraged by a slowing rate of job losses. The economy lost 345,000 jobs last month, fewer than expected and the lowest number since September, the Department of Labor reported June 5.

Rising Unemployment

Still, unemployment rose to 9.4 percent, higher than the 8 percent the administration projected when it pressed Congress to enact the American Recovery and Reinvestment Act.

“Hopefully, that is a sign that this is turning,” David Axelrod, senior adviser to Obama, told CNN yesterday. “While it’s going to take some time for these unemployment numbers to turn around, for the momentum to completely stop and turn in the other direction, it feels as if we’re moving business card.”

Vice President Joe Biden, who later today will formally present Obama with the administration’s latest economic stimulus goals, said a “good foundation” was laid in the first 100 days of the Recovery Act.

“We plan to build on that foundation and accelerate our efforts so we can accomplish even more,” Biden said in a statement. “We’re going to get more dollars out the door, more shovels into the ground and more money into the pockets of workers and families who need it most.”

Committing Funds

In the three months after the Democratic-led Congress approved Obama’s stimulus plan, the government doled out about 11 percent of the emergency stimulus funds, according to a progress report released by Biden’s office on May 13.

The administration says it will commit about 70 percent of the money by the end of the next fiscal year, less than the 75 percent that White House officials projected in February.

Biden, citing “significant progress,” stressed in the May report that most programs and projects were running ahead of schedule and under budget.

The act resulted in 150,000 jobs being created or saved in the first three months, the assessment said.

The 10 new projects to be financed with stimulus funds include hiring or retaining about 5,000 law enforcement officers, starting 200 new waste and water systems in rural areas, creating 125,000 summer jobs for young people and initiating 2,300 construction and rehabilitation projects at military facilities across the nation, the administration said.

“We will not grow complacent or rest,” Obama said. “Surely and steadily, we will turn this economy around.”

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Australia’s economy unexpectedly grew in the first quarter, skirting the global recession that has swamped the U.S., the U.K. and Japan, as exports and consumer spending increased.

Gross domestic product rose 0.4 percent in the three months to March 31 after it contracted a revised 0.6 percent in the fourth quarter, the Bureau of Statistics said in Sydney today. The median estimate of 18 economists surveyed by Bloomberg was for a 0.2 percent decline.

Stocks rose and the nation’s currency jumped to the highest in eight months as the report confirmed Australia is one of only a few economies including China and India that expanded last quarter. Record interest-rate cuts and more than A$12 billion ($9.9 billion) in government cash handouts to consumers fueled growth even as businesses slashed investment spending.

“Rumors of the death of the Australian economy have been highly exaggerated,” said Craig James, chief equities economist at Commonwealth Bank of Australia in Sydney.

“Much of the credit for Australia’s resilience must be given to the swift actions of the Reserve Bank and government in stimulating our economy.”

The Australian dollar rose to 82.40 U.S. cents at 1:07 p.m. in Sydney from 81.91 cents before the report was released.

Stocks Rise

The S&P/ASX 200 stock index increased 1 percent, paced by shares of Australia’s largest telephone company, Telstra Corp., which gained 2.3 percent. Furniture retailer, Harvey Norman Holdings Ltd., rose 5.8 percent.

Consumer spending advanced 0.6 percent in the quarter, adding 0.3 percentage points to GDP, today’s report showed. Government spending rose 0.3 percent and exports increased 2.7 percent.

Still, parts of the economy remain weak. Business investment tumbled 6.1 percent and imports fell 7 percent as companies such as Rio Tinto Group cut spending and fired workers. Car sales dropped 14.9 percent in May from a year earlier, the Federal Chamber of Automotive Industries said today.

“We’re not out of the woods yet,” said Helen Kevans, an economist at JPMorgan Chase & Co. in Sydney. “Technically we have skirted recession, but the underlying details in the data aren’t painting a great picture.

‘‘We’ve got investment falling and imports tanking, which is symptomatic of weaker investment, and households are being artificially supported by government cash handouts.”

Government Spending

Prime Minister Kevin Rudd, who said in April that the country’s economy is in its first recession since 1991, began distributing cash handouts of as much as A$900 in March to low- and middle-income earners.

“It’s been the right strategy under very difficult global conditions,” Rudd told reporters in Canberra today. Still, “difficulties and obstacles lie ahead.” Unemployment will rise and “there is no guarantee that GDP won’t fall in future Internet Payday loans.”

The jobless rate has climbed to 5.4 percent in April from 3.9 percent in February 2008 as companies such as Qantas Airways Ltd. fired workers.

Among evidence that Australia is weathering the global slump, building approvals jumped twice as much as economists forecast in April, new homes sales gained for a fourth month and the current account deficit narrowed in the first quarter as agricultural exports surged.

Today’s report showed rural exports jumped 18.3 percent in the quarter. Wheat output rose to 21.4 million tons in 2008-2009, the biggest crop in three years, from about 13 million tons a year earlier, according to the Australian Bureau of Resource and Agricultural Economics.

Retail sales rose in the first quarter and again in April.

‘More Resilient’

Woolworths Ltd., Australia’s largest retailer, said last month that sales surged 6.5 percent to A$12.3 billion in the three months ended April 5. Caltex Australia Ltd., the nation’s largest oil refiner, said on April 23 that first-quarter operating profit gained 11 percent.

“It’s good for confidence that we’ve avoided that technical recession,” defined as two consecutive quarters of declining GDP, said Brian Redican, a senior economist at Macquarie Group Ltd. in Sydney. Today’s GDP figures “indicate Australia is much more resilient than many other economies.”

The economy grew 0.4 percent from a year earlier. Economists forecast a 0.4 percent contraction.

By contrast, Japan’s economy shrank 9.7 percent in the year, the U.K.’s GDP dropped 4.1 percent, the 16-member euro region contracted 4.6 percent and the U.S. slid 2.5 percent. The economy of China, Australia’s largest trading partner, grew 6.1 percent and India expanded 5.8 percent.

Interest Rates

The global turmoil, triggered by last year’s collapse of Lehman Brothers Holdings Inc., prompted Reserve Bank Governor Glenn Stevens to slash the overnight cash rate target between September and April by a record 4.25 percentage points.

Stevens left the rate unchanged at 3 percent yesterday for a second month and signaled that he is prepared to cut borrowing costs from a 49-year low to spur domestic demand “if needed.”

“The prospect of inflation declining over the medium term suggests that scope remains for some further easing of monetary policy,” Stevens said.

Investors expect Australia’s overnight cash rate target will be higher in 12 months, according to a Credit Suisse Group AG index based on swaps trading.

Traders forecast the benchmark will be 24 basis points higher in 12 months, the index showed at 12:39 p.m. in Sydney. At the start of May, they tipped 37 basis points of cuts. A basis point is 0.01 percentage point.

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