US economic data last week featured an eagerly awaited indicator, the Gross Domestic Product (GDP) for the last quarter of 2010.
Following the weakness in mid-2010, the economy returned to an above-average 3.2% growth in Q4.
Private consumption and net exports were the main drivers. Meanwhile, following the latest Federal Open Market Committee meeting, the Federal Reserve left interest rates on hold in the 0-0.25% range, in line with expectations.
In contrast to 2010 meetings, there was a unanimous vote. The Fed was more optimistic about the economic outlook, but still said growth was insufficient to lower unemployment.
Meanwhile, the number of orders for durable goods fell 2.5% in December, much worse than the 1.5% increase expected.
However, this was mainly dragged down by a drop in aircraft orders. In fact, capital orders excluding non-defence aircraft rose 1.4% in December over the previous month.
In the eurozone, the Composite Purchasing Managers (PMI) index, a survey based on the services and manufacturing industries, rose more than expected to 56.3 in January – the highest level in six months – from 55.5 the previous month.
This gain was mainly led by an increase in the services PMI index, while the manufacturing index fell lower than expected.
New industrial orders in November exceeded forecasts, mainly led by gains in Germany, as they climbed 2.1% in November, from the previous month when they rose 1.4%.
Meanwhile, money supply growth, a guage of future inflation, eased to 1.7% in December on a year earlier, from 2.1% the previous month.
UK GDP contracted by 0.5% during the final three months of last year, the most in over a year. Economists were expecting 0.5% growth following the 0.7% expansion in the previous quarter. The drop in the GDP was attributed to declines in the construction, services and retail sector due to the unusually cold winter.
The International Monetary Fund forecasted UK economic growth of 2% this year, lower than Germany’s and the US growth projections.
Retail sales shrank by a more than expected 0.8% in December after a 0.4% rise in November.
This was the biggest drop for any December since records began. But retail sales excluding the drop in auto fuel due to travel disruption fell in line with expectations by 0.3%.
This article has been prepared by Bank of Valletta plc for general information purposes only.