Consumers keep spending

The reliance of the global economy on the US consumer may be easing somewhat.

There was good news on the Japanese consumer this week. Consumer confidence rose to 46.8 last month from 45.9 in December. Meanwhile, demand for services as measured by the tertiary index climbed 1 percent in February following a revised 0.4 percent gain in January, helping to boost the all-industries index to a rise of 0.9 percent in February.

For the Japanese economy as a whole, though, the index of leading economic indicators for February has been revised down to 27.3 from an initial reading of 30.0, although a report from the central bank's regional branches said that Japan's economy is improving or expanding in all of the country's nine regions.

Meanwhile, consumer spending has also been robust elsewhere. French consumer spending on manufactured goods, for example rose, 0.7 percent in March.

UK retail sales did slow in March, though, rising 0.3 percent. But that followed a revised 1.6 percent gain in February, the strongest monthly gain in more than two years.

Rising pay is helping keep consumer spending up in the UK. Median British pay deals held at an 8-year high of 3.5 percent in the three months to March.

So does low interest rates, rate hikes notwithstanding. A study by Alliance and Leicester indicates that UK interest rates would need to rise to 8.5 percent for the cost of debt servicing as a proportion of national income to hit levels seen in 1990. So the BoE rate of 5.25 percent may not be such a big deal.