Italian economic woes continue
US creates more jobs than forecast
During the second quarter of this year, Italian gross domestic product (GDP) fell 0.7 per cent. This is the fourth straight quarter of contraction in Italy, as manufacturing slumped and the euro area debt crisis deepened.
However, the second quarter decline in GDP was less than the 0.8 per cent contraction forecasted by a Bloomberg News survey. GDP contracted by 2.5 per cent from the same quarter a year earlier. This is the biggest fall in Italian GDP since the final quarter of 2009.
Meanwhile, in the UK, the Bank of England (BOE), unveiling its inflation report, reduced its growth forecast for the country, saying that in two years’ time the economy would be growing at about 2.1 per cent a year.
That is much slower than the bank’s 2.6 per cent forecast three months ago.
The BOE also signalled that the economic recovery would be slower and weaker than anticipated and left the door open for an easing of monetary policy later on this year.
In its May inflation report, the bank had predicted that annual inflation would stay above its two per cent target for another year; in the latest report it forecast that inflation would ease quickly to this target and hover at or below that level for two years.
Finally, an unexpected pick-up in employment has boosted pay-rolls in the US which climbed more than forecasted in July.
Payrolls increased by 163,000, following a 64,000 rise in June. A Bloomberg News survey had predicted a 100,000 gain in payrolls.
This latest data goes counter to recent reports that show weakening manufacturing and consumer demand.
Although the latest numbers were greeted by equity markets, they were not enough to reduce the jobless rate, as a separate survey showed the unemployment rate notched up to 8.3 per cent, a five-month high.
This article was compiled by Bank of Valletta for general information purposes only.