Another rate cut and more gloomy economic data

Rate-cutting continued on Thursday, this time in the Philippines. AFP/CNA reports:

The Philippine central bank on Thursday cut its benchmark lending rates by 50 basis points as it switched tack from fighting inflation to boosting growth.

Its first rate cut in 11 months brought the overnight rate to 5.50 per cent for borrowing and to 7.50 per cent for lending – their lowest levels since June.

With global economic data still looking poor, there appears to be no end to rate cuts in sight -- apart from those already at zero.

Like in the US, which will have to rely on quantitative easing after Thursday's data showed how weak the economy is. From Bloomberg:

A gauge of the economy’s future performance posted its biggest annual drop since 1991 in November as the declines in housing and job markets accelerated, showing little sign the U.S. contraction will ease in early 2009.

The Conference Board’s index of leading indicators dropped 0.4 percent from October, and 3.7 percent from a year before. Other reports showed first-time claims for unemployment benefits held close to a 26-year high and manufacturing in the Philadelphia region contracted for the 11th time this year.

The Canadian economy is also deteriorating. Bloomberg reports:

Retail sales fell 0.9 percent in October to C$35.9 billion ($29.8 billion), the most since February, Statistics Canada said today in Ottawa, after a 0.9 percent gain the month before. Sales of furniture, home furnishings and electronics fell 2.1 percent, the third straight decline.

The leading economic index fell 0.7 percent in November as the agency’s gauge of housing starts and sales fell 5.9 percent and stock prices plummeted 8.2 percent. Economists surveyed by Bloomberg anticipated the index would drop 0.4 percent.

Meanwhile, German business confidence dropped to the lowest in more than a quarter century in December. Bloomberg reports:

The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, fell to 82.6 from 85.8 in the previous month. That’s the lowest reading for Ifo’s main index since November 1982. Economists expected a drop to 84, the median of 39 forecasts in a Bloomberg News survey shows.

But amid the gloomy data, there was a surprisingly positive report on UK retail sales. From Reuters:

The Office for National Statistics said sales volumes rose 0.3 percent last month, confounding forecasts for a 0.6 percent decline and flying in the face of anecdotal evidence that consumers are tightening their belts.