Global economy continues to look strong

Reuters reports that the US economy continues to show signs of recovery.

The Philadelphia Federal Reserve Bank said its business activity index jumped to 18.0 in June, its highest since April 2005 and up from 4.2 in May...

Applications for state unemployment insurance benefits rose 324,000 in the week ended June 16 from a revised 314,000 the previous week. Wall Street analysts had forecast claims at 312,000.

Still, a forward-looking economic gauge released later in the morning pointed to a pick-up in growth. The Conference Board, a private research firm, said its index of leading economic indicators rose 0.3 percent in May, suggesting the economy will strengthen through the summer and into the fall.

Bloomberg reports that European manufacturing and service industries unexpectedly accelerated in June.

European manufacturing and service industries making up two-thirds of the economy grew at an unexpectedly rapid pace in June as companies hired workers and invested in offices and equipment.

Royal Bank of Scotland Group Plc's combined index, spanning industries from oil and autos to banking and airlines in the euro region, rose to 57.7 from 56.8. Economists expected a decline to 56.6, according to a Bloomberg News survey...

The gauge of services increased to 58.3 in June from 57.3 in May, and the manufacturing index rose to 55.4 from 55.

Manufacturing is looking strong in the UK too, according to Reuters.

The Confederation of British Industry said its monthly manufacturing order books balance rose to +8 from +5 in May, matching the 12-year high it hit in March. Analysts had predicted an unchanged reading of +5.

The balance of firms expecting to raise their prices in the coming months eased to +16 from a 12-year high of +25 in May.

And in Japan, Bloomberg reports that a surge in exports helped the trade surplus widen in May.

Exports rose 15.1 percent from a year earlier, compared with 8.2 percent in April, the Ministry of Finance said today in Tokyo. The gain beat economists' estimates, helping the trade surplus widen 9.3 percent to 389.5 billion yen ($3.2 billion)...

Imports climbed 15.5 percent to a record 6.2 trillion yen, the ministry said, as a weaker yen increased the cost of goods purchased from overseas. Economists predicted imports to rise 10.3 percent and exports to increase 11.8 percent.

But while the real economy chugs along steadily, the risk of a financial crisis is always present, as the continuing Bear Stearns saga reminds us.