Rates left unchanged amid better-than-expected data

The economic spotlights last week were primarily focused on the meetings of the European Central Bank (ECB) and the Bank of England (BoE).

In the US, economic data was slightly stronger than expected with jobless claims falling by 33,000 to a nine-month low of 521,000 last week. The Institute of Supply Management index for the non-manufacturing sector rose to a reading of 50.9 in September from a prior reading of 48.4 during August, which was the strongest reading for over 12 months.

Meanwhile, the US trade deficit unexpectedly narrowed in August as exports climbed to their highest level of the year and oil imports dropped. In fact, the trade gap fell 3.6% to $30.7 billion from a revised $31.9 billion in July.

In the Eurozone, the ECB held interest rates at 1% . Retail sales were also better than expected, dropping only 0.2% in July against a anticipated 0.5% drop. There was a rebound in sales in the food sector, which signalled that consumer demand was benefiting from positive economic data elsewhere.

In Germany, industrial data was broadly in line with market expectations with a further recovery in orders for August.

In the UK, the BoE left interest rates unchanged at 0.50% following the latest policy meeting, which was in line with expectations. The amount of quantitative easing was also left on hold at £175 billion, with the bank expecting that the program of bond purchases will be completed within the next month.

The National Institute of Economic and Social Research reported that the UK economy recorded no growth in the three months to September, following a revised 0.1% increase the previous month.

Meanwhile, Britain's manufacturing sector seems to be stabilising as the Purchasing Managers Index for September recorded a reading of 49.5, fractionally below the 50 mark that signals expansion.

This article has been prepared by Bank of Valletta plc, which is licensed to conduct investment services business by the MFSA, for your general information only. This information is not a solicitation or offer by the bank to acquire or sell securities. Nor does it constitute any form of advice by the bank. Appropriate advice should be obtained before making any such decision. Past performance is not necessarily a guide to future performance and the value of your investments may fall or rise.