Principal news stories from the Irish Independent, Irish Times, Irish Examiner, Financial Times and New York Times.

Data from Nomura/JMMA showed further contraction of the Japanese manufacturing sector in April but. The seasonally adjusted headline Purchasing Managers’ Index (PMI) rose sharply to 41.4, from 33.8 in the previous month, to signal that operating conditions deteriorated at the least marked rate since last October.

The ESRI (Economic and Social Research Institute) holds a policy conference in Dublin today on the Irish Labour Market in Recession. The Institute says that following a decade of high employment growth and very low rates of unemployment, the Irish labour market is now in crisis. Employment is contracting at a very fast rate: current ESRI estimates are there will be on average 190,000 fewer people in employment in 2009 compared with 2008, and that employment will fall by a further 100,000 over the following year. Correspondingly, unemployment rates are rising at an alarming pace, with the result that the unemployment rate this year is expected to average 13 percent, and in 2010 to rise to over 16 percent. The ESRI says these are challenging figures for policy makers and for society at large.

After a relatively small change in total outstanding stocks in the third quarter, banks’ external loans shrank by 5.4% in the fourth quarter of 2008 ($1.8 trillion at constant exchange rates), to $ 31 trillion. This was the largest reduction ever recorded in a single quarter, in at least 30 years. Claims denominated in US dollars and yen were down by 6% and 15%, respectively, and claims vis-à-vis non-banks declined by 8%, according to the Bank of International Settlements (BIS).

The Irish Revenue Commissioners have confirmed that people who bought their homes since 2002 will have their mortgage interest relief cut off from Friday, until they can show they are entitled to it. First Time Buyers will continue to get relief.

President Barack Obama said on Wednesday night he wants to get the government out of the private sector as fast as possible — but that as long as his administration is acting as a major shareholder for large sectors of American commerce, from cars to finance, he won’t hesitate to shape decisions at those firms. The Federal Reserve following a two-day meeting of its rate-setting Federal Open Market Committee (FOMC) also said on Wednesday, the economic outlook had “improved modestly” and that the Fed would continue to pump tens of billions of dollars into the economy to keep credit flowing. To encourage this borrowing, and spending, interest rates controlled by the Fed would remain near zero, the policy makers said.

The Shanghai government is trying to orchestrate the buyout of a twin-tower hotel project as its chief backer wavers about the cost of completing it.

Markets news on stocks, currencies and oil.

In April, the Economic Sentiment Indicator (ESI) for the EU and the Eurozone picked up for the first time since May 2007 (excluding a small blip in March 2008 for the EU). The Business Climate Indicator (BCI) for the Eurozone increased in April.

There were 7,348 new private cars licensed in March 2009, compared with 20,190 in March 2008, a decrease of 63.6%, according to the CSO.