Fourth quarter growth in the euro area came out on the weak side of expectations. Reuters reports:
The euro zone economy ended last year with stable growth, missing expectations as expansion rates in the region's three largest nations fell short of forecasts and Greece and Portugal contracted...
The European Union's statistics office Eurostat said gross domestic product in the 16 countries using the euro at the time grew 0.3 percent in the October-December period, the same as in the third quarter, and 2.0 percent year-on-year...
German gross domestic product increased by 0.4 percent, against expectations of a 0.5 percent rise and decelerating from 0.7 percent in the third quarter...
In France, the economy grew just 0.3 percent, half the forecast increase and the same level as in July-September, despite a rush to buy cars before a French scrappage subsidy scheme ended last year.
In the US, January retail sales were also weaker than expected. Bloomberg reports:
Sales at retailers rose less than forecast in January, showing it will be difficult for American consumers to sustain last quarter’s pickup in spending without bigger gains in employment.
Purchases increased 0.3 percent, the smallest gain since a drop in June, according to Commerce Department figures today in Washington...
Excluding autos, gasoline and building materials, which are the figures used to calculate gross domestic product, sales increased 0.4 percent after a 0.1 percent drop the prior month that was previously reported as a gain.
Other US data were less disappointing.
Manufacturing in the region covered by the Fed Bank of New York expanded this month at the fastest pace since June, another report showed. The bank’s general economic index rose to 15.4 from 11.9 in January. Readings greater than zero signal growth in the so-called Empire State Index, which covers New York, northern New Jersey, and southern Connecticut.
The National Association of Home Builders/Wells Fargo said its sentiment index registered a reading of 16 in February for the fourth consecutive month, in line with the median forecast of economists surveyed by Bloomberg. Readings below 50 mean more respondents said conditions were poor.
Also today, figures from the Labor Department showed import prices climbed 1.5 percent in January, propelled by higher costs for commodities like food and fuel.
Over in China, lower-than-expected data on Tuesday were probably more welcome. From AFP/CNA:
China said Tuesday its inflation rate stayed stubbornly high at 4.9 percent in January, sparking analyst predictions that the government would take further aggressive fiscal steps to cool prices.
The consumer price index, the key gauge of inflation in the world's second economy, was "lower than market expectations" according to the National Bureau of Statistics but still above Beijing's four percent full-year target...
New monthly lending data also released on Tuesday provided a ray of hope for policymakers.
The value of new loans fell to 1.04 trillion yuan (US$158 billion), down about 23 percent year on year.
Meanwhile, UK inflation in January turned out not much lower than China's. From Reuters:
Inflation jumped to twice the Bank of England's target in January, prompting Bank Governor Mervyn King to acknowledge that interest rates might rise more rapidly than economists had expected.
Consumer price inflation surged to a two-year high of 4.0 percent from 3.7 percent in December, providing an awkward backdrop for the central bank's updated quarterly growth and inflation forecasts on Wednesday.
Unlike the BoE, the Riksbank has already taken action to head off inflation. Bloomberg reports its latest monetary policy decision:
Sweden’s central bank raised its benchmark repo rate for a fifth time since July and signaled it will pick up the pace of monetary tightening to keep inflation and credit growth in check in Europe’s fastest-growing economy.
The Stockholm-based Riksbank raised the seven-day repo rate a quarter of a percentage point to 1.5 percent, it said today on its website. The decision was expected by all 22 economists surveyed by Bloomberg. The bank also raised its rate path and now expects the repo to average 2.5 percent in the first quarter next year, compared with 2.2 percent previously.
Understandably, the BoJ has taken its time in tightening monetary policy, despite upgrading its outlook for the economy recently. AFP/CNA reports:
The Bank of Japan (BoJ) on Tuesday upgraded its view of the country's economy for the first time in nine months due to a pick-up in global growth, as it kept its key rate unchanged between zero and 0.1 per cent.
"Japan's economy is gradually emerging from the current deceleration phase," the BoJ said in a statement, noting that Japanese exports and production are "showing signs of resuming an uptrend" amid global growth led by emerging markets...
After a two-day meeting, the bank's board unanimously decided to leave its key rate near zero, as Japan remains mired in deflation.
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