Scepticism persists over Greek debt restructuring whilst British exports focus on Asian and American markets
02/Μαρ/2012 • Currency Updates•
Eurozone members delayed approval of more than half of the €130bn bail-out for Greece after asking Athens to show extra proof that it would implement hastily agreed spending cuts and reforms. Finance ministers from the 17 country currency bloc met in Brussels yesterday, signing off funds funds to underpin a €206bn restructuring of privately help Greek debt. However, this was met with scepticism as there was a request for a detailed assessment of the implementation of 38 measures by the EU and IMF officials for next week before handing over the remaining €71.5bn. In other news, the Euro reached its weakest level against the Greenback, dropping 0.1%: a week low. The single currency received some support from the purchasing managers data for February, showing that despite a seventh consecutive month of contraction, the rate of contraction had slowed. The positive news is also reflected in Italian 10-year bonds, which went for a yield of 5%; Spanish bonds also faired well with a lower than 5% yield. However, pessimism remains over Portugal’s status as bond yields continue to increase and GDP continues to contract. Indeed, the Eurozone jobless rate rose to a record 10.7% and the inflation rate edged up 2.7%.
Britain’s manufacturing sector provided further evidence that the recovery is on track. However, this comes with a pinch of salt as growth was slower than expected after oil and commodity costs picked up sharply. Manufacturers are hiring at the fastest rate since last June and are exporting more to the US and Asia, thus reducing British exposure to the nervy Eurozone. However, the PMI showed overall a reading 51.2, down from 52 in January, although anything above 50 indicates expansion. However, fears remain over March as February figures suggests that there will be further contraction. It must be pointed out that this data is in stark contrast to the final quarter of 2011 where there was a 0.9% contraction.
US consumer spending grew less quickly than hoped in January, suggesting Americans were still uneasy about spending more loosely. Spending climed 0.2%, half of what Wall Street had predicated. Incomes increased a smaller-than-expected 0.3% according to the Commerce Department. Hence, real incomes fell 0.1% during the month. Nonetheless, yesterday saw further evidence of recovery in the country’s job market. The number of new applicants for jobless benefits slipped by 2,000 to 351,000 mathcing a four-year low. The less volatile four-week moving average dropped to 359,000 – the lowest in 3 years. However, it must be noted that the economy only grew by 1.7% in 2011. Moreover, RBS predicts that 230,000Americans found jobs last month. The exact figure will be released next Friday. However, a separate report yesterday showed that US manufacturing’s expansion unexpectedly slowed last month. The Institute for Supply Management’s Factory index dipped to 52.4 in February from 54.1 in January.