Saturday, 26 July 2008

Global economies slowing but US looking better

Inflation accelerated in Japan in June, the core rate, which excludes volatile fresh seafood, fruit and vegetable prices, hitting 1.9 percent from 1.5 percent in May.

But global inflation concerns may yet be overtaken by global slowdown concerns.

Elsewhere in Asia, South Korea reported that its economic growth slowed to an annual rate of 4.8 per cent in the second quarter from 5.8 per cent in the first.

In the euro zone, growth in money supply may already have peaked. From Bloomberg:

European money-supply growth slowed more than economists forecast in June, reducing pressure on the European Central Bank to raise interest rates.

M3 money supply, which the ECB uses as a gauge of future inflation, rose 9.5 percent from a year earlier after increasing 10 percent in May, the Frankfurt-based bank said today. That's the weakest since November 2006. Economists expected M3 growth to slow to 10.3 percent, the median of 33 forecasts in a Bloomberg News survey shows.

Meanwhile, the UK economy is visibly slowing. Bloomberg reports:

The U.K. economy expanded 0.2 percent in the second quarter, matching the slowest pace since 2001, as shrinking manufacturing and construction and the banking slump brought Britain closer to a recession.

Gross domestic product grew 1.6 percent from a year earlier, the least since 2005, the Office for National Statistics said in London today. The quarterly and annual growth figures both matched the median forecast of economists in a Bloomberg News survey.

In contrast, US economic data on Friday looked relatively positive. Again from Bloomberg:

Bookings for goods made to last several years gained 0.8 percent and posted the first consecutive monthly rise since July 2007, the Commerce Department said today in Washington. New homes sold at an annualized pace of 530,000, exceeding the median forecast of 503,000 in a Bloomberg News survey...

The Reuters/University of Michigan final index of consumer sentiment increased to 61.2 in July from 56.4 in June. The measure averaged 85.6 in 2007 and is up from a preliminary reading of 56.6 in early July.

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