The U.S. Commerce Department announced that orders for durable goods increased by 3.8 percent for the month of November. This greatly exceeded expectations of a 2 percent increase.
“This was a positive surprise, and the prior month’s number was also revised upwards,” said Chris Orndorff, senior portfolio manager at Western Asset Management.
“A good sign, but the rolling average of the last three months is still far below the high durable goods levels of Q1 2011.
“And the 2011 levels are below the 2010 levels, so by this measure the economy is still muddling along. However, at least it is in positive territory.”
The latest HSBC Purchasing Manager’s Index showed that China’s services sector continued to slow during November recording the slowest rate of growth in the last three months. The index suffered a significant decline to 52.5 from a reading of 54.1 in October.
“With price pressures easing further, Beijing can and should use policies that are targeted on small businesses and service sectors to keep GDP growth at above 8 percent for the coming year,” Qu Hongbin, HSBC’s chief China economist, said in a statement.
Source: Reuters
JPMorgan Chase & Co. said today it expected U.S. Gross Domestic Product (GDP) to rise by 3 percent in the final three months of the year compared to an earlier prediction of 2.5 percent. Other firms suggested the rate of growth could be even higher such as State Street Global Markets which expects growth for the quarter to reach 3.3 percent.
The reason given for the more positive outlook is that consumers have maintained spending levels. This has allowed companies to add to their inventories on extended demand.
Source: Bloomberg
The number of new applications for unemployment benefits declined by only 1,000 to a seasonally-adjusted 428,000 last week. The fact that new claimants remained basically unchanged for the week provides further evidence that the U.S. economy is failing to make inroads on improving employment.
In May, only 54,000 new jobs were added compared to an average of 220,000 new jobs per month for the previous three months. The decline has caused the unemployment rate to climb to 9.1 percent.
Source: Associated Press
Struggling with weak growth and the aftermath of the earthquake and tsunami earlier this year, the world’s third largest economy has fallen back into recession. Gross domestic product shrank 0.9% in the first three months of the year, the Cabinet office said, giving an annualised rate of contraction of 3.7%.
“Japan’s economy is expected to remain weak for the time being,” said Japanese Economics Minister Kaoru Yosano on Thursday. However, Mr Yosano said that supply constraints were easing and reconstruction demand was likely to spur growth. “The economy has the strength to bounce back,” Mr Yosano said.
Source: BBC News
Ireland’s economy shrank the most in a year in the fourth quarter of 2010 as consumer spending, investment and exports declined.
Gross domestic product fell 1.6 percent from the previous three months, when it increased 0.6 percent, the Central Statistics Office said in Dublin today. Consumer spending declined 0.4 percent on the quarter, exports fell 1.4 percent and investment dropped 2.3 percent. In 2010, the economy shrank 1 percent, a third straight annual contraction.
Bloomberg
A bailout for Portugal may total as much as 70 billion euros ($99 billion), said two European officials with direct knowledge of the matter.
A financial lifeline would be between 50 billion euros and 70 billion euros, said the officials who declined to be named because the issue is confidential. Portugal has not yet asked for a bailout. The figures remain preliminary, the officials said. Royal Bank of Scotland Group Plc estimates the cost of a rescue at about 80 billion euros.
Portugal moved closer to external aid after Prime Minister Jose Socrates’s offer to resign left his government in limbo on the eve of today’s European Union summit to address the region’s debt crisis.
Bloomberg
The rate of inflation in the UK fell slightly to 3.1 percent in July compared to 3.2 percent in June. While prices continue to rise, the rate of increase has slowed in each of the past three months.
Despite the slowing of price increases, inflation still continues to exceed the target rate of 2 percent. This fact requires Bank of England Governor Mervyn King to issue an “open letter” to the Chancellor of the Exchequer to explain why inflation remains above the target. In his letter to the Chancellor, King alluded to an increase in the Value Added Tax (VAT) rate to 17.5 percent from 15 percent, and an increase in energy prices as the chief reasons for the higher inflation rate. King also noted that “there remains a significant probability that I will need to write further open letters to you in the coming months”.
Source: BBC News
Recovery in the jobs market will “stall” this year as demand for workers in the public sector falls, new research has warned.
According to the Chartered Institute of Personnel and Development (CIPD), a third of employers expect to cut jobs in the next three months.
The public sector employers in particular are planning cuts, with 36% of them looking to lose staff.
The size of the cuts being considered has also increased, the CIPD said.
Across all sectors employers are expecting to make an average of 5.5% of their workforces redundant, the survey of 600 companies suggests, up from the 3.6% average cut being considered three months ago.
BBC Mobile
For the first time since the start of the financial crisis in August 2007, U.S. investors own more Treasuries than foreign holders.
Mutual funds, households and banks have boosted the domestic share of the $8.18 trillion in tradable U.S. debt to 50.2 percent as of May, according to the most recent Treasury Department data. The last time holdings were as high, Federal Reserve Chairman Ben S. Bernanke cut interest rates for the first time between scheduled policy meetings as losses in subprime mortgages spurred a flight from riskier assets.
Demand for Treasuries from U.S. investors is climbing as consumer spending and incomes stagnate and the savings rate reaches the highest level in almost 18 years — 6.4 percent in June. The retrenchment by individuals, as well as banks buying government bonds instead of increasing lending, is driving yields lower as President Barack Obama’s administration borrows record sums to finance an unprecedented budget deficit.
Bloomberg
