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Prospects Daily: US unemployment claims fall to 5-year low, Serbia’s central bank raises policy rate

Global Macroeconomics Team's picture

Financial Markets… U.S. and European stocks rose today, amid better- than-forecast initial unemployment claims and housing data in the US and increased revenues for European retailers. The S&P 500 rose 0.4% to 1,478.14 at 10:43 a.m. EST. The Dow Jones Industrial Average added 58.25 points, or 0.4%, to 13,569.48. The Stoxx Europe 600 Index (SXXP) rose 0.4% to 287.04 at 3:49 p.m. in London, the biggest increase since Jan. 9.

The euro approached a 10-month high against the dollar, appreciating 0.5% to $1.3358 at 10:57 a.m. New York time after climbing earlier as much as 0.7%, and rose 1.6% against the yen to 119.37 yen, as Spain’s borrowing costs fell at a 4.5 billion-euro ($6 billion) sale of bonds. The UK pound sterling depreciated 0.7% to a nine-month low of 83.62 pence per euro at 4:06 p.m. London time, after reaching 83.65 pence, the weakest since March 29. 

High-income EconomiesUS initial unemployment claims fell by 37,000 to a five-year low of 335,000 in the week ended January 12. The four-week moving average of claims, a better measure of trends, dropped to 359,250 from 366,000, suggesting that the pace of firings by firms is subsiding. US new housing construction accelerated 12.1% (m/m) in December to a 954,000 unit annual rate, the highest since June 2008.

The Netherlands’ unemployment rate rose to 7.2% in December from 7% the previous month. The unemployment rate has been rising almost continuously since June 2011 when it stood at 5%.

Ireland’s consumer price inflation rose to 1.2% (y/y) in December from 0.8% in November, rising by 0.1% (m/m) according to the central statistical office. On an EU adjusted (HICP) basis, inflation edged up to 1.7% (y/y) in December from 1.6% in November, with prices unchanged from the previous month.

Hong Kong’s unemployment rate edged down to 3.3% in the three month period ending in December from 3.4% in the September-November period, as business activity during the year-end holiday season helped to support the labor market.

Developing EconomiesBrazil's central bank held its benchmark Selic rate steady at 7.25%. Brazil's headline inflation rate rose to 5.84% in December, remaining above the midpoint of the central bank’s target range (4.5%, +/- 2 percentage points).

central bank raised its benchmark policy rate by 25 basis points to 11.50%, its seventh rate increase since mid-2012, in its effort to contain pressures on inflation and foreign exchange reserves. The headline inflation increased to 12.2% (y/y) in December, remaining above the central bank’s targeted range of 4.0%, +/- 1.5 percentage points, and core inflation was at 8.2%.

Sri Lanka's central bank held its benchmark repurchase rate steady at 7.50%. Sri Lanka's inflation rate eased to 9.2% (y/y) in December from 9.5% in November. The rupee has been appreciating against the US dollar on the back of growing foreign exchange inflows.

World Bank’s Global Economic Prospects, January 2013: Video clips