US leading index jumps, European growth forecast upgraded, FDI in China rises

Prospects for the world economy in 2006 continue to look good.

In the US, the Conference Board's leading index jumped in January.

The Conference Board announced today that the U.S. leading index increased 1.1 percent, the coincident index increased 0.2 percent and the lagging index increased 0.7 percent in January...

The leading index now stands at 140.1 (1996=100). Based on revised data, this index increased 0.3 percent in December and increased 0.9 percent in November. During the six-month span through January, the leading index increased 2.3 percent, with nine out of ten components advancing (diffusion index, six-month span equals ninety percent).

The minutes from the last FOMC meeting suggests that the Federal Reserve is not too concerned about growth in the US.

Although the stance of policy seemed close to where it needed to be given the current outlook, some further policy firming might be needed to keep inflation pressures contained and the risks to price stability and sustainable economic growth roughly in balance.

Europe is also expected to see continued growth.

The economies of Germany, Britain and France will grow faster than expected this year, Joaquin Almunia, EU monetary affairs commissioner, said on Tuesday, but he warned that bird flu could pose a threat to the European recovery.

Mr Almunia predicted that European Union growth would reach 2.2 per cent this year, up from the 2.1 per cent he predicted last autumn...

In spite of poor growth in the fourth quarter of 2005, Mr Almunia left unchanged his growth forecast for the 12-country eurozone at 1.9 per cent.

And foreign direct investment to China looks likely to help keep that country's rapid growth going for at least a while more.

Foreign direct investment (FDI) to China in the first month rose nearly 11 per cent from a year earlier, the Ministry of Commerce said yesterday, showing foreign investors attracted to the large export base and huge consumption market are not losing steam.

The total FDI in January was US$4.55 billion, up 10.99 per cent compared to US$4.1 billion last January.