The Bank of England meeting on Thursday ended uneventfully. Reuters reports:
The Bank of England kept interest rates at 0.5 percent for the 18th month in a row and announced no new quantitative easing purchases, in a widely expected decision on Thursday.
UK economic data on Thursday was not encouraging. Again from Reuters:
The Office for National Statistics said Britain's goods trade gap widened to 8.667 billion pounds in July from 7.532 billion in June, wrong-footing analysts who had expected a broadly unchanged reading...
Imports rose 3.1 percent on the month in value terms, driven by an increase in imports of organic chemicals, pharmaceuticals and oil, the latter due to maintenance work on North Sea oil rigs.
Exports, by contrast, fell 0.9 percent, led again by chemicals and oil.
In contrast to the UK, the US trade deficit fell in July. From Bloomberg:
The U.S. trade deficit narrowed more than forecast in July and filings for jobless benefits plunged last week, tempering concern the world’s largest economy is slipping back into a recession.
The trade gap shrank 14 percent, the most since February 2009, to $42.8 billion, the Commerce Department said today in Washington. The deficit was less than the lowest forecast in a Bloomberg News survey of economists. New applications for unemployment insurance fell by 27,000 to 451,000, the lowest since July 9, according to the Labor Department...
Overseas shipments increased 1.8 percent to $153.3 billion, the highest since August 2008, while purchases from abroad declined 2.1 percent...
Some good news also came from Japan today. From Bloomberg:
Japan’s economy expanded more than initially estimated in the second quarter, driven by exports and an upward revision to capital spending.
Gross domestic product grew at an annualized 1.5 percent rate in the three months ended June 30, faster than the 0.4 percent reported last month, the Cabinet Office said today in Tokyo. The figure matched the median of 21 estimates in a Bloomberg News survey of economists. In nominal terms, GDP shrank 0.6 percent from the previous quarter.
The outlook for the Japanese economy remains a concern, however. On Thursday, a report had shown that consumer confidence continues to decline. Nikkei reports:
Japanese consumer confidence fell for the second straight month in August, with the index down 0.9 point from a month earlier to 42.4, the Cabinet Office said Thursday.
And business confidence may be peaking. Bloomberg reports:
Japan’s largest manufacturers are becoming less optimistic about business conditions toward the end of the year as the yen’s advance threatens profits.
The same percentage of big manufacturers reported they are pessimistic about the fourth quarter as those saying they are optimistic, resulting in an index reading of zero, a government report showed in Tokyo today. For the three months to September the figure rose for the fifth quarter in a row, to 13.3 points from 10.
But it's not just Japan. The OECD sees the economic recovery for the world slowing and has revised its GDP growth projections downwards.
The world economic recovery may be slowing faster than previously anticipated, according the OECD’s latest Interim Economic Assessment. Growth in the Group of Seven countries is expected to be around 1½ per cent on an annualized basis in the second half of 2010 compared with the previous estimate of around 1¾ per cent in the OECD’s May Economic Outlook.
The OECD says the loss of momentum in the recovery is temporary although uncertainty has increased.
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