UK contraction slower, Japan unemployment worst since WWII, EEurope rebounds strong

Those are just a few economic stories for today (more coming out later).

Predicted to contract at 0.8%, the UK economy shrank slightly better by 0.7% increasing hopes that a positive rebound may happen in the third quarter.  The biggest contributors were the energy, manufacturing  and wholesale sectors, while also citing the car scrappage scheme as another reason.  That said, some are questioning the validity of the idea that things are getting better and the prospect of a 3rd quarter growth given some negative economic data that came out a day or so before the GDP number was reported today.

Today’s data shows that construction and services sectors’ outputs suffered their largest falls since they were first recorded.

That showed that a recovery would be based on fragile foundations, warned Vicky Redwood of Capital Economics. She added that today’s revision was “pretty insignificant when set against the near-6% drop in output seen during this recession”.

More from The Guardian.

From an economy that contracted to one that expanded – Japan.

The country’s most recent GDP report puts the Land of the Rising Sun as one of the few who were early to come out of the recession, after its economy grew by 0.9%.  But things are not very rosy for its people.  Its unemployment rate went up from 5.4% last month to 5.7%, its highest level since World War II.  With more people unemployed, it comes as no surprise that average monthly income, consumption expenditure, and finally consumer prices all declined as well.

From MarketWatch:

The unemployment rate was higher than the 5.5% expected by economists, according to Dow Jones Newswires, and is the highest on record since World War II.

The number of unemployed people rose 40.2% from July of last year to 3.59 million, the government said.

More here.

From bad news, let’s go back to good news: stabilization in the markets everywhere is helping the central and eastern European countries recover from the catastrophic declines they have seen within the past 10 months.  Here’s how their respective indexes performed since the end of June:

The biggest surge has been seen in Lithuania. The OMX Vilnius index has jumped 48 per cent in local currency terms since the close on June 30.

Other strong performers include the Czech Republic’s PSE index, up 32 per cent, Estonia’s OMX Tallinn index, up 29 per cent, Poland’s WIG index, up 27 per cent, Hungary’s Budapest Stock Exchange, up 26 per cent, and Latvia’s OMX Riga index, up 16 per cent.

Meanwhile, Sweden’s OMX 30 index rose by 15% while Austria’s ATX index is up more, at 21 per cent. Mention of these countries were necessary given the huge exposure they have to the banks in the CEE region.

Things seem all good, but beware: things are good when times are good but from the beginning of the crisis up to present, I don’t recall any significant changes happening in central and eastern Europe as well as their banks and those in Austria or elsewhere with a huge exposure in the region.  So the remarks of Nigel Rendell, senior emerging markets strategist at RBC Capital Markets, I think, are spot on: “The region may have performed well but, if there is any increase in risk aversion, these markets could fall sharply.”

Read the report from the FT.

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