Summary of the Key highlights/KPIs of the US, UK, and European economies over 2011

US – Key highlights

• Economic recovery continued during 2011 (although, at a slower pace than during 2010).
• Revisions to data communicated throughout the year meant that it was not until Q3 that nominal GDP exceed pre 2008-09 recession levels.
• 4-week average for jobless claims currently below 375,000 - its lowest level since mid-2008.
• December ISM Manufacturing Purchasing Managers’ survey at a 6-month high of 53.9.
• University of Michigan consumer confidence measure at a 6-month high and the Conference Board measure at an eight-month high in December.
• December 13^th, FOMC noted that “indicators point to some improvement in overall labour market conditions” and “Household spending has continued to advance, but business fixed investment appears to be increasing less rapidly”.
• FOMC continues to anticipate that it will maintain the Federal Funds target at its current 0-0.25% level until at least the middle of 2013.

 

UK – Key highlights

• Anticipated increase of UK economy of 0.9% during 2011, however inflated due to reversal of weather-affected Q4 2010.
• Consumer confidence per GfK NOP survey at -33 in December, the lowest level since early 2009. It has only been lower on two occasions – a single month in 1990, and eight months during the 2008-2009 recession.
• Largest fall within the index was in the measure for the General Economic Situation over the next 12 months.
• Unemployment, per by the ILO method, at 8.3%, the highest for fifteen years.
• Manufacturing survey still remains below the critical 50 level.
• Inflation appears to have peaked in the UK, with the year-onyear rate in November standing at 4.8%, compared to September’s peak of 5.2%.
• December MPC meeting noted that “inflation is more likely to be below than above the 2% target at the forecast horizon”.

 

Europe – Key highlights

• ECB brought interest rate back down to the 1% level by the end of 2011.
• In addition, 2 three year long-term refinancing operations were announced, the first of which generated a substantial response with the ECB allocating €489 billion to 523 banks.
• The aim of these operations seems to be to encourage banks to lend more to the private sector, and to buy the sovereign debt of the more distressed Euro-zone countries.
• The Euro-zone economy is now expected to fall back into recession, with contractions during both Q4 2011 and Q1 2012.
• ECB in December gave an anticipated range for GDP growth in 2012 between -0.4% and 1% and for 2013 between 0.3% and 2.3%, and stated that there is “substantial downside risks to the economic outlook for the euro area exist in an environment of high uncertainty”.
• December Manufacturing, Services and Composite indices all remain below the critical 50 level, although some small increases to the Euro-zone Purchasing Managers’ Surveys.
• End of year economic and consumer confidence at lowest levels for over two years and unemployment level remains at 10.3%, the highest level since 1998.
• Uncertainty and scepticism over the new measures proposed to deal with the latest economic position expected to generated volatility within the financial markets.