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By HaleStewart November 10, 2013 8:35 am
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International Week In Review: Moderate Growth And Easy Money Continue

Australia continues to have fairly decent economic numbers.  Last month retail sales  rose .3%,  -- the same rate as the previous month.  The year over year number was 2.6%.  Additionally, home prices increased 1.9% from the second to third quarter.  The unemployment rate, which has risen from 5.4% in October 2012 to 5.7% over the summer, appears to have stopped increasing; it has printed at 5.7% over the last three months.  The RBA described the Australian economy in these terms in their latest policy announcement when the kept rates at 2.5%:

In Australia, the economy has been growing a bit below trend over the past year and the unemployment rate has edged higher. This is likely to persist in the near term, as the economy adjusts to lower levels of mining investment. Further ahead, private demand outside the mining sector is expected to increase at a faster pace, though considerable uncertainty surrounds this outlook. There has been an improvement in indicators of household and business sentiment recently, but it is still too soon to judge how persistent this will be. Public spending is forecast to be quite weak.

The EU continues to show some slight improvement in its overall economic condition.  The EU composite Markit number printed at 51.9 in October.  While retail sales were down .6% month over month, they were up .3% year over year.  However, the most important development last week was the EUs decision to lower interest rates by 25 basis points, largely out of concern the region is experiencing deflation.  Here is how Draghi described the overall EU situation at the press conference where he announced the EU rate decision:

Let me now explain our assessment in greater detail, starting with the economic analysis. Real GDP in the euro area rose by 0.3%, quarter on quarter, in the second quarter of 2013, following six quarters of falling output. Developments in survey-based confidence indicators up to October are consistent with continued, albeit modest, growth in the second half of the year. Looking ahead, output is expected to continue to recover at a slow pace, in particular owing to a gradual improvement in domestic demand supported by the accommodative monetary policy stance. Euro area economic activity should, in addition, benefit from a gradual strengthening of demand for exports. Furthermore, the overall improvements in financial markets seen since last year appear to be gradually working their way through to the real economy, as should the progress made in fiscal consolidation. In addition, real incomes have benefited recently from generally lower energy price inflation. This being said, unemployment in the euro area remains high, and the necessary balance sheet adjustments in the public and private sectors will continue to weigh on economic activity.  

The UK continues to print very solid economic numbers.  Industrial production increased .6% from 2Q-3Q and 2.6% Y/O/Y.  At the same time, the central bank is maintaining its lower interest rates, at least for the time being as they kept rates at .5% in their latest policy announcement.

Canada continues to show modest overall growth.  While unemployment is still at 6.9%, it is clearly on a decelerating trajectory.  And employment increased 1.4% Y/O/Y.

Finally, the US grew 2.8% in the third quarter: The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, residential fixed investment, nonresidential fixed investment, and state and local government spending that were partly offset by a negative contribution from federal government spending.  Imports, which are a subtraction in the calculation of GDP, increased.

Overall, most of the world's major economies continue to show moderate improvement.  The good news is there is little demand pull or supply push inflationary pressure anywhere, thereby allowing central banks to maintain fairly loose policy.  However, as with most of the economic numbers since the end of the great recession, there is always the concern that the growth is not strong enough to lower the still uncomfortably high levels of unemployment that exist in the US, the EU and the UK. 

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