UK economy shrinks 1.9 percent

The UK economy shrank at its sharpest rate in 30 years in the first three months of 2009. Reuters reports:

Official figures on Friday -- the first sign from a major G7 economy of the nature of the downturn at the start of the year -- showed British gross domestic product fell 1.9 percent on the quarter, the biggest fall since the third quarter of 1979.

Still, there are tentative signs of stabilisation.

Looking forward, economists are starting to believe the worst of the recession is over given the most recent evidence from business surveys. There are also some signs that banks are starting to lend more, a crucial factor in any recovery.

And UK retail sales picked up at the end of the first quarter. The BBC reports:

Retail sales volumes in March were 0.3% higher than in February when sales fell by 2%. Sales in March were 1.5% higher than a year ago.

The volume of sales in the first three months of the year was just 0.9% up on the previous three months.

Elsewhere in Europe, German business confidence rebounded in April, the IFO index rising to 83.7 from 82.2 in March.

However, a recovery in the global economy may take a while to come as US economic data released on Friday showed that negative trends persisted. From Bloomberg:

Orders for U.S. durable goods in March fell less than forecast and sales of new houses were higher than projected, signs the economic slump is easing.

Bookings for goods meant to last several years fell 0.8 percent last month, the Commerce Department said today in Washington. The median estimate of economists surveyed by Bloomberg News called for a 1.5 percent drop. New-home sales dipped 0.6 percent to a 356,000 annual pace after Commerce said the February reading was stronger than previously estimated.