US Fed may take new measures to stimulate growth

In the US, contrary to expectations of a 0.1% decline, sales at retail stores increased by 0.1% in June.

This may suggest real private consumption may have increased slightly last month. However, it also shows the pace of recovery is still slow.

Federal Reserve chairman Ben Bernanke told the US Congress that the central bank is prepared to take additional action to stimulate economic growth if conditions deteriorate.

In the UK, unemployment claims saw their biggest jump since May 2009, increasing by 24,500, well above the 15,000 gain expected by economists.

However, according to the wider International Labour Organisation unemployment measure, the number of people without a job dropped by 26,000 in the three months to May. The unemployment rate fell to 7.7% from the 7.8% registered in the three months to February.

In the meantime, inflation in the UK slowed down unexpectedly in June, falling from a two-and-a-half year high of 4.5% registered in May to an annualised 4.2% last month. Economists had expected inflation to remain stable at 4.5%.

Slower inflation may provide support for the Bank of England’s decision to keep rates at record low levels in order to aid the economy’s fragile recovery.

In the eurozone, the inflation rate remained at 2.7% in June for the second month, thus exceeding the European Central Bank’s 2% ceiling for the seventh straight month.

Meanwhile, industrial production in the 17-nation euro region also rose by 0.1% in May, lower than expectations of a 0.4% increase.

This article was compiled by Bank of Valletta plc for general information purposes only.