Bank of England Monetary Policy Committee +0.25%
(Econoday.com) - As expected, the Bank of England's Monetary Policy Committee increased its key interest rate by 25 basis points to 4 percent. The MPC increased rates at its November 6, 2004 meeting. In its statement, the Bank said that the rate hike was needed because of above-trend growth and the continued strength of domestic demand. The Bank said that "the world economic recovery has become more broadly based. In the United Kingdom, output growth in the second half of last year was above trend and business surveys point to a further pickup in the first quarter. Household spending and borrowing have been resilient, and the housing market remains strong. Although sterling has appreciated, continued growth above trend means that inflationary pressures are likely to pick up gradually over the next couple of years. Against that background, and despite CPI inflation currently below the 2 percent target, the Committee judged that an increase of 0.25 percentage points in the repo rate to 4.0 percent was necessary to keep CPI inflation on track to meet the new target in the medium term."
European Central Bank Governing Council - Unchanged
(Econoday.com) - As expected, the European Central Bank left their key interest rate at 2 percent. The Bank had lowered its interest rate by 50 basis points to 2.0 percent at its June 5, 2003 meeting. The ECB has an inflation ceiling of 2 percent. Growth in both France and Germany managed to creep upward in the third quarter, but worries abound about its viability. The strength of the euro could nip the nascent recovery before it can gather steam. There will be a press conference after today's meeting as there usually is after monetary policy meetings.
Non-farm Productivity +2.7%
Unit Labor Costs -1.3%
(Econoday.com) - Non-farm productivity growth slowed in the fourth quarter, rising 2.7 percent vs. expectations for a rise of 3.0 percent and compared with the whopping 9.5 percent pace of the third quarter. The data reflect slower output growth and increased worker hours.
Nevertheless, productivity has grown so sharply for so long that the data do not mark an economic shift. Non-farm productivity rose 4.2 percent in 2003 compared with 4.9 percent in 2002.
The labor cost of output continues to decline, though at a less severe rate. Unit labor costs fell 1.3 percent in the quarter, much less steep than the 5.6 percent fall in the third quarter. Year-on-year labor costs were down 2.0 percent in the quarter. Compensation rose a modest 1.3 percent, down from the 3.4 percent rise of the third quarter.
Jobless Claims 356K
(Econoday.com) - In a slight back step from recent trend, initial jobless claims rose sharply in the latest week, up 17,000 to 356,000 (week ended Jan. 31). The results cloud the employment picture a bit, as falling claims had offered the best evidence of job improvement.
But the Labor Department said bad weather in the Midwest and Southeast added to the week's layoffs. And the four-week average was more encouraging, staying unchanged at 345,250 and indicating that employers are not increasing the pace of layoffs. The latest week's 356,000 total is about the median over the past three months.
Continuing claims (reported with a week's lag) were unchanged at 3.123 million. The four-week average for continuing claims, which offers an important look at how hard it is to get a job, fell to the same 3.123 million total, the lowest level in 2-1/2 years.
Chain Store Sales
(Econoday.com) - Chain stores said unusually cold weather in the Midwest and Northeast helped, not hurt, general merchandise sales in January, driving up demand for winter clothes. Stores also said sales were helped by the redemption of gift cards, a craze this holiday season. Wal-Mart posted a sharp 5.7 percent year-on-year rise in same-store sales. The nation's largest retailer said sales were strongest at the end of the month. JC Penney, a leading apparel retailer, reported a 6.4 percent rise in sales. High-end retailers again reported especially strong results, including Saks and Nieman Marcus this month.
04.02.05 11:55 #