Thursday, 16 September 2010

US industrial production slows, Japan sells yen

US economic data on Wednesday indicate that the economy is slowing. Bloomberg reports:

Factory production cooled in August, pointing to a slower pace of growth as the U.S. struggles to sustain a recovery from the worst recession since the 1930s.

Industrial output rose 0.2 percent after a 0.6 percent gain in July that was smaller than previously estimated, figures from the Federal Reserve showed today...

The Fed Bank of New York’s so-called Empire State index fell to 4.1 this month, the lowest reading since July 2009, from 7.1 in August. Readings greater than zero signal expansion. Measures of orders, sales and employment all improved, signaling the drop was mainly a reflection of waning confidence.

The cost of goods imported into the U.S. rose 0.6 percent in August, more than forecast, as crude oil and food costs jumped, masking contained inflation elsewhere, Labor Department figures also showed today.

Meanwhile, the euro area released data on inflation and employment. Again from Bloomberg:

European inflation slowed in August, led by energy costs and as companies held back from hiring amid signs the recovery is losing momentum.

Consumer prices in the 16 euro nations increased 1.6 percent from a year earlier after rising 1.7 percent in July, the European Union statistics office in Luxembourg said today. That’s in line with an initial estimate published on Aug. 31. Payrolls in the region were unchanged in the second quarter from the previous three months, a separate report showed.

There were also employment data from the UK on Wednesday. Reuters reports:

The number of Britons claiming jobless benefit rose last month for the first time since January, raising fears the recovery could be faltering even before the bulk of public spending cuts kick in.

The Office for National Statistics said claimant count unemployment rose by 2,300 in August, confounding expectations for a modest decline and bringing to an end a six-month period in which it had fallen by more than 150,000.

But markets on Wednesday were mostly abuzz with Japan's intervention in the currency market. From Reuters:

Japan's bold strike to weaken its currency on Wednesday sent the yen tumbling more than 3.0 percent against the U.S. dollar, but unsettled allies who feared the unilateral move may complicate efforts to restore balanced global economic growth.

Japan unleashed waves of yen selling, estimated at more than $20 billion, which spread from Tokyo through New York trading. The sales, conducted alone without help from its Group of Seven partners, are expected to continue in the days ahead, Japanese news agency Nikkei reported.

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