Weekly economic review

US jobless falls to 9.7%In the US, unemployment fell unexpectedly in January to 9.7%, the lowest level since August, but payrolls dropped as companies boosted worker hours and overtime instead of taking on new employees.

Meanwhile, the Institute for Supply Management's index of national factory activity rose to 58.4 in January, the highest level since 2004, from a revised 54.9 in December.

US consumer confidence rose to a two-year high this month as the economic outlook improved. Consumer spending rose 0.2% in December, after increasing by an upwardly revised 0.7% the previous month.

The European Central Bank's decision on Thursday to leave the interest rate at 1.0% was in line with expectations. ECB chairman Jean-Claude Trichet suggested that rates would be left on hold for the next few months. But his comments were overshadowed by budget and debt fears over the Eurozone's weaker economies, particularly Greece.

Meanwhile, according to Eurostat, the unemployment rate in the Euro-zone rose to 10% of the workforce in December from a downwardly revised 9.9% in November. Inflation also inched up to 1% year-on-year during the month of January, much less than expected, and up from 0.9% in December.

The producer price index edged up in December by 0.1% against the previous month while the Eurozone manufacturing sector grew at its fastest pace in two years in January to a reading of 52.4.

In the UK, the Bank of England on Thursday paused its £200 billion bond-purchase plan and also kept the benchmark interest rate at a record low of 0.5%, as expected. In the meantime, the Nationwide consumer confidence index rose three points to 73 in January, almost twice the low of 39 recorded in the same month last year.

There was also an improvement in the construction Purchasing Managers Index (PMI), however, this remained below the 50 level. Meanwhile, PMI manufacturing data was significantly stronger than expected with an increase to a 15-year high of 56.7 in the January survey. The index for the services sector was significantly weaker than expected with a decline to 54.5 for January from 56.8 previously.

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