US GDp up 3.2%

In the US, data continued to reflect expectations that the economy will outperform the Eurozone over the next few months. According to GDP data released on Friday, the US economy grew by 3.2% in the first quarter of 2010, led mainly by private demand. Consumer confidence data was stronger than expected, rising to 57.9 for April from a revised 52.3 the previous month.

In the labour market, jobless claims fell to 448,000 in the week ending April 17, which was close to expectations. The Case-Schiller house-price index registered an annual 0.6% increase, the first such rise in three years, although below consensus forecasts. The Federal Reserve held interest rates in the 0.25% range at the latest Federal Open Market Committee meeting.

In the Eurozone, attention remained focused on Greece's medium-term financing risks due to its high debt burden. Greece's deficit was recently upwardly revised to 13.6% of GDP in 2009 from the previously reported 12.7%. Meanwhile, rating agency Standard and Poor's last week downgraded Greek's sovereign rating by 3 notches to BB+ and Portugal from A+ to A-, leaving both on a negative outlook.

The total budget shortfall in the 16 nations using the euro widened to 6.3% of GDP, led by Greece and Ireland. Inflation in the region rose 1.5% in April from a year earlier, after a 1.4% gain in March.

Unemployment in the EU-16 held steady at 10% in March, the highest since August 1998. Elsewhere, a consumer sentiment index in the euro-area, although still negative, rose to 15.2 in April from 17.3 in March.

In the UK, GDP data for the first quarter of 2010 showed that the UK economy grew less than expected at 0.2%, after a 0.4% increase in the previous quarter. This slowdown was mainly attributed to weaker growth in the services sector.

UK house prices measured by Nationwide rose by 1% from March for the second consecutive month. This was more than expected and took the percentage annual increase in house prices to double-digits for the first time in nearly three years.

The number of UK housing mortgage approvals rose in March as loans increased to 52,000, from a nine-month low of 48,000 the previous month.

Finally, a preliminary estimate of broad money supply growth increased by just 0.1% in March, lower than the 0.2% increase in February. Money supply grew 3.5% in March on a year-on-year basis.

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.