The U.K. economy grew more than initially estimated in the fourth quarter as consumers and exporters steered Britain into its longest stretch of uninterrupted growth since 2008. Household spending rose 0.6 percent in the three months through December and exports jumped 4.6 percent, the most since 2013. Gross domestic product expanded 0.6 percent, more than the 0.5 percent reported last month, for an eighth consecutive quarterly gain.
While the economy powers ahead, the Bank of England says it will keep the key interest rate at a record low as it monitors the implications of the unprecedented slide in the inflation rate to zero. Rising wages and cheaper food and fuel are boosting real incomes, which rose 1.4 percent in the fourth quarter. In the third quarter, GDP growth was revised down to 0.6 percent from 0.7 percent.
With imports rising just 1.6 percent, net trade contributed 0.9 percentage point to GDP in the fourth quarter, the most since the first quarter of 2013. Consumer spending added 0.4 percentage point. Business investment acted as a drag on growth after falling 0.9 percent in the quarter.
Tuesday’s GDP report showed the savings ratio, the amount of disposable income households set aside rather than spend, rose to 5.9 percent in the fourth quarter from 5.8 percent in the third.
Data published showed unemployment in Germany fell to a record low. In Italy the jobless rate unexpectedly rose and the country’s inflation rate turned negative. Eurozone unemployment was 11.3 percent in February, the European Union’s statistics office said. The jobless rate for January was revised higher to 11.4 percent from 11.2 percent. Italy’s rate increased to 12.7 percent in February from 12.6 percent. In contrast, Germany was at 4.8 percent.
ECB president Mario Draghi has repeatedly criticized governments for backsliding on the structural adjustments that he sees as critical for a sustained recovery. He told European lawmakers last week measures must be implemented promptly and with determination if ECB monetary stimulus is to be fully effective.
GBP - 09:30: UK manufacturing PMI (March) expected to be higher to 54.3 from 54.1
USD - 15:00: US ISM Manufacturing PMI (March) expected to be lower at 52.5 from 52.9
USD - 15:00: US ADP Employment change (March) expected to improve to 225K from 212K
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