The US economy shrank in the fourth quarter, but by less than expected. Bloomberg reports:
The U.S. economy shrank the most in the fourth quarter since 1982 as consumer spending recorded the worst slide in the postwar era, a trajectory that’s likely to continue in coming months.
The 3.8 percent annual pace of contraction was less than forecast, with a buildup of unsold goods cushioning the blow. Excluding inventories, the decline was 5.1 percent, the Commerce Department said today in Washington...
The Institute for Supply Management-Chicago said today its business barometer decreased to 33.3 from 35.1 the prior month. The index has remained below 50, the dividing line for contraction, for four months. Meanwhile, consumer confidence rose less than forecast this month, a Reuters/University of Michigan index showed. The gauge climbed to 61.2 from 60.1 in December.
A separate report today showed that employment costs in the U.S. rose at the slowest pace in almost a decade in the fourth quarter as companies limited wage gains and benefits. The Labor Department’s employment-cost index rose 0.5 percent.
GDP has also been shrinking in Canada. Bloomberg reports:
Canada’s economy contracted in November by the most since the 2003 power outage, led by slumping production in the manufacturing and construction industries.
Gross domestic product fell 0.7 percent, its second straight decline and the biggest drop since August 2003 when northeastern North America was hit by a power blackout, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg said output would fall 0.4 percent, the median of 21 estimates.
Meanwhile, weakness in the eurozone economy has helped drive down inflation but pushed up unemployment. Again from Bloomberg:
Inflation in the euro region slowed to 1.1 percent in January from 1.6 percent in the prior month, the European Union statistics office in Luxembourg said today. That was below the 1.4 percent median estimate in a Bloomberg survey of economists and was the lowest since July 1999. A separate report showed the jobless rate rose to 8 percent in December, the highest in two years, from a revised 7.9 percent in the previous month.
One bright spot for the economy recently has been improvement in the credit markets. Three-month US dollar LIBOR dropped 26 basis points in January, although it rose one basis point to 1.18 percent on Friday.
Friday also saw Reuters report positive news on UK lending.
Figures from the Bank of England showed net mortgage lending rose by 1.903 billion pounds in December 2008, the biggest increase since July of that year and more than three times analysts' forecasts for a rise of 600 million.
The number of home loan approvals rose to 31,000 in December from a record low of 27,000 the previous month and confounded forecasts for a slight decrease to 26,000.