Thursday, 2 May 2013

Fed on hold even as economy shows signs of weakening

The Federal Reserve did not increase monetary stimulus at its policy meeting on Wednesday.

Relatively weak economic US data released that day suggest that it may yet do so later.

A report from ADP on Wednesday showed that US private sector employment rose by 119,000 in April, fewer than the 131,000 increase in March.

Another report in the US showed that construction spending fell 1.7 percent in March following the biggest slump in government projects in 11 years.

Other reports showed that US manufacturing slowed in April. Markit's manufacturing PMI fell to 52.1 from 54.6 in March while the Institute for Supply Management's manufacturing PMI fell to 50.7 from 51.3.

Meanwhile, manufacturing also slowed in China in April.

A report from the National Bureau of Statistics and the China Federation of Logistics and Purchasing on Wednesday showed that their manufacturing PMI fell to 50.6 in April from 50.9 in March. A report from HSBC and Markit on Thursday showed that their manufacturing PMI fell to 50.4 in April from 51.6 in March.

There were some signs of recovery in the UK on Wednesday though. The Markit/CIPS manufacturing PMI rose to 49.8 in April from 48.6 in March and house prices rose 0.9 percent in April from a year ago according to Nationwide.

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