In January, economic confidence in the countries that use the euro increased more than forecast by economists, adding to signals that the economic fortunes of the 17-nation currency bloc may be turning around.

A report published by the European Commission shows that a gauge of executive and consumer sentiment rose to 89.2 from a revised 87.8 in December. That is the highest since June. According to a Bloomberg news survey, economists had expected an increase to 88.2. The euro hit a thirteen-month high on this news.

Meanwhile, according to UK research agency GfK NOP Ltd, UK consumer confidence improved in January, as Britons were more willing to make big purchases and become more optimistic about their economic prospects.

The index that gauges sentiment rose to -26 in January from -29 in December. Economists polled by a Bloomberg News survey had forecasted an increase to -28. A measure of consumers’ view of the economy over the next 12 months rose six points to -25.

In the meantime, according to Nationwide Building Society, the average cost of a home in the UK in January notched up 0.5 per cent from December to £162,245 (€186,694). The pound reacted positively to this news.

Finally, during the fourth quarter of 2012, the US gross domestic product (GDP) contracted by 0.1 per cent on an annual basis, down from 3.1 per cent growth in the third quarter.

This was the first decline in quarterly GDP since the recession ended. However, mild growth of the world’s largest economy still seems to be in place if unusual factors are excluded from the latest GDP data.

The fourth-quarter retreat was caused mainly by lower inventories and a sharp drop in military spending. Separately, in December, the S and P/Case-Shiller index of property values increased 5.5 per cent from November 2011. This was the biggest year-over-year increase since August 2006. Record low mortgage rates will probably underpin a third consecutive advance in home sales this year, which will keep house prices rallying.

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

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