IMF says recovery has started

The IMF thinks the global economy has begun to recover. Bloomberg reports:

The global economy is beginning to recover from the worst recession since World War II, one that has left “deep scars” likely to affect consumers and businesses for years, said Olivier Blanchard, the chief economist of the International Monetary Fund.

“The recovery has started,” Blanchard said in a paper the Washington-based lender released today. “The crisis has left deep scars, which will affect both supply and demand for many years to come.”

German investors probably agree that a recovery has started. From Bloomberg:

German investor confidence jumped to its highest level in more than three years in August after government stimulus and rising exports pulled Europe’s largest economy out of recession.

The ZEW Center for European Economic Research said its index of investor and analyst expectations rose to 56.1 from 39.5 in July. Economists predicted a gain to 45, according to the median of 35 forecasts in a Bloomberg News survey. That’s the highest since April 2006. The survey aims to predict economic developments six months in advance.

However, as if to emphasise the IMF's caveats about the recovery, US economic data on Tuesday were mixed. From Bloomberg:

American builders broke ground on more single-family homes in July for a fifth straight month as the real-estate industry stabilized further.

Work began on single-family dwellings at a 490,000 annual pace last month, up 1.7 percent from June and the most since October, the Commerce Department reported today in Washington. Total housing starts unexpectedly fell, depressed by a 13 percent decrease in multifamily units, including condominiums and apartment buildings...

Total housing starts declined 1 percent in July to an annual rate of 581,000, the first drop in three months, from a 587,000 pace a month earlier, the Commerce Department report showed...

Building permits, a sign of future construction, fell 1.8 percent in July to a 560,000 annual pace from 570,000. Permits for single-family houses climbed 5.8 percent last month, while those for multifamily units dropped 26 percent.

Separately, a Labor Department report today showed wholesale prices fell 0.9 percent, exceeding the median forecast of economists surveyed by Bloomberg, as energy costs receded. Compared with a year earlier, producer prices were down 6.8 percent, the most since records began in 1948.

As US producer price data show, deflation remains a concern despite the incipient recovery, and despite the fact that in the UK, the inflation rate remains barely below the central bank's target. From Reuters:

Inflation unexpectedly held steady in July, official data showed Tuesday, but economists still expect big falls in the annual rate this year and monetary policy to stay loose for some time to come.

The Office for National Statistics said consumer prices were unchanged on the month in July, keeping the annual rate at 1.8 percent. Analysts had predicted a further easing below the Bank of England's 2 percent target to 1.5 percent.