"After the snow-related blip at the start of the year, the services sector is pretty much firing on all cylinders now. February saw business activity surge at its fastest rate in over three years as the sector helps to drive the UK economy further out of recession."
David Noble, CEO at the CIPS, on newly published service sector sentiments
Bullet point Overview:
| Inflation |
UK CPI (+3.5%) / Eurozone (+1%) / US (+2.6%) |
| Interest rates |
UK 0.5% / ECB 1% / US (0.25%) |
Unemployment
|
UK 7.8% / NI 6.0% / RoI (Jan) 13.8% / Euro area (Jan)=9.9% |
| Employment Rate Q4 |
UK 72.4% / NI 67.3% |
| Equity markets |
FT100 5,546.32 (3.58 % w/w) / Dow Jones: 10,444.14 (1.19 % w/w) (as of 10,30hr 05 Mar 2010) |
| Currency markets |
Week average: £/euro=1.11 (-1.4% w/w) £/$=1.51 (-1.2 % w/w) |
| Commodities |
Crude oil $ 77.21 /barrel (+2.2 % w/w) |
| Consumer confidence (UK) |
80 (+8.1 % m/m) |
| Producer sentiments (UK) |
Manufacturing 56.6 / Service 58.4 / Construction 48.5 |
LOCAL ECONOMIC NEWS:
Farming
EU has allotted £26 million to support UK dairy farmers affected by negative changes in demand and prices over the last year. Northern Ireland has received £3.8 million of this financial assistance.
Cold weather payments
Additional cold weather payments has been made eligible for parts of Northern Ireland where average temperatures below 0 have been recorded in the period between 16 February and 22 February.
NATIONAL ECONOMIC NEWS
Bank of England
On Thursday the Bank of England announced that it will keep the interest rate at 0.5 % and keep the current level of Quantitative Ease (QE) at £200 bn. This came as no surprise to the markets. The BoE has stressed that it could expand QE at a later data, if it felt that it was necessary.
Consumer confidence
Consumer confidence rose by a staggering 8.1 % in March following a few months with an almost flat development. The rise took markets by surprise as a small decrease was expected. It is especially the consumers view on the current economic environment that has increased albeit from a very low starting point.
UK Producer sentiment
New producer sentiment indices from all sectors were released last week. Both Manufacturing and Construction sector sentiment stagnated following about six months of improvements. Service sector sentiment rose compared to last month by 7.2 % (market expectation: 6.2 %). Within manufacturing “new orders” improved due to better order flows from both domestic and export markets. Within Construction, the residential housing sub-sector saw an increase for the sixth consecutive month.
UK House prices
Halifax House Price Index showed a decrease of 1.5 % compared to last month. Last week’s figure from Nationwide showed a 1 % decrease in house prices.
INTERNATIONAL ECONOMIC NEWS
EU Unemployment
The unemployment rate for the Euro Area has stayed on 9.9 % for third consecutive month after increasing since May 2008 (7.1%). The unemployment rate for December 2009 has been revised downward by 0.1 percentage point.
US Producer sentiment
Manufacturing sentiments decreased by 3.3 % while non-manufacturing sentiment rose by 5 %. The Non-Manufacturing index is now at its highest since October 2007. Markets had expected a small decrease (-1.2 %) in Manufacturing sentiment due to the bad weather last month amongst other things. The rise in Non-Manufacturing sentiments was somewhat higher than market expectations of +1 %.
Equity Markets
FT100 has risen by a staggering 3.6 % this week while Dow Jones saw an increase of 1.2 %. The FT100 has steadily increased during the week following positive sentiment report from consumers and producers. The Dow Jones index has again this week seen a lot of volatility on day to day basis. The week started positively for the Dow Jones index following a surprisingly strong increase in US Consumer spending and the announcement that Prudential is buying US Insurance company AIG’s Asian business (AIA) for a total amount of $35.5 bn.
Thomas Bech Hansen
Economist
Northern Bank
08 Mar 2010
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