During the fourth quarter of last year, the eurozone economy experienced its most severe contraction in almost four years. This took place against the backdrop of falling trade and investment.

According to Eurostat, GDP in the 17-nation single currency zone fell by 0.6 per cent from the third quarter. This confirms an initial estimate published earlier. During the year as a whole, the economy contracted by 0.9 per cent.

The euro-area economy has contracted for three quarters in a row, a trend many economists believe will continue in the first quarter of 2013. In the meantime, during its monthly monetary policy meeting, the European Central Bank maintained its benchmark interest rate at 0.75 per cent.

In the UK, the Bank of England kept its benchmark interest rate at 0.5 per cent and its bond-purchase programme dormant. The decision was widely expected, even though the minutes of the bank’s February meeting had fuelled speculation that it is beginning to favour additional asset purchases. The pound rose in value after the announcement of the decision.

Finally, in the US, according to the Institute for Supply Management, its index of non-manufacturing activity rose to 56 in February from 55.2 in January. Readings above 50 indicate expansion.

The report measures growth in industries that comprise about 90 per cent of the workforce, including construction, retail, financial services and health care.

The recovery in the housing market underpinned the index. Service companies also kept adding employees last month.

A measure of service sector employment fell only slightly during February after reaching a nearly seven-year high in the prior month.

In the meantime, the Dow Jones Industrial Average climbed to a record high last week amid optimism the Federal Reserve will continue its stimulus measures to support the economic recovery.

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