Saturday, 25 July 2009

UK economy shrinks but global economy on the mend

The UK economy shrank more than expected in the second quarter. Reuters reports:

The economy shrank more than twice as fast as expected in the second quarter to register its biggest annual decline since comparable records began in 1955, official data showed on Friday.

The Office for National Statistics said GDP fell by 0.8 percent on the quarter, taking the annual decline to 5.6 percent. Analysts had forecast a quarterly decline of just 0.3 percent after a hefty 2.4 percent drop in the first quarter.

Still, the second quarter performance shows an economy on the mend. Other data on Friday tell similar stories for other regions.

Bloomberg reports that the euro area is edging towards recovery.

Europe’s economy moved closer to recovery as the manufacturing and service industries contracted at the slowest rate since August and German business confidence climbed to a nine-month high.

A composite index of both industries for the 16 euro nations rose to 46.8 from 44.6 in June, a survey of purchasing managers by Markit Economics showed today. According to a separate report, the Ifo Institute’s index of business sentiment in Germany, the region’s largest economy, increased to 87.3 from 85.9, reaching the highest since October...

Markit’s manufacturing index rose to 46 this month from 42.6 in June after reaching a low of 33.5 in February, according to today’s report. The services index increased to 45.6 from 44.7 and its low was 39.2, also in February.

US consumer confidence did fall in July, but not as badly as indicated in the preliminary report. From Bloomberg:

Confidence among U.S. consumers fell in July for the first time in five months as mounting unemployment and stagnant wages shook households.

The Reuters/University of Michigan final index of consumer sentiment decreased to 66, in line with forecasts, from 70.8 in June. A preliminary report for July showed a reading of 64.6.

And some Asian economies are growing rapidly again. AFP/CNA reports South Korea's second quarter performance.

Surging exports and consumer spending fuelled growth of 2.3 per cent for South Korea's economy in the three months to June, its fastest rate in more than five years, data showed Friday.

The quarter-on-quarter growth in gross domestic product (GDP) was up sharply from the first quarter's slender gain of 0.1 per cent, the central Bank of Korea said.

Even Japan's economy may be recovering. Its all industry activity index rose 0.7 percent in May, its second consecutive increase.

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