Mixed Signals Reflect Complexity of Global Economy

By: Mike Campbell
Data from South Korea indicates that the growth rate in the economy is at its highest level for seven years. According to the Bank of Korea, the figures for Q3 2009 show GDP up by 2.9% in the previous quarter. The figure was a 0.6% rise on the year-on-year data for Q3 2008, ending three consecutive quarters of decline. The Korean stock exchange (Kospi) put on 1% to 1657.1 points yesterday on the back of the news. The Kospi has recovered by 46% this year, following on from losses of 41% in 2008.

In the UK, the Confederation of British Industry (CBI) has reported that UK high street sales have risen to their highest level for two years. 41% of those indicated in their sales volumes had risen whilst a third of those surveyed indicated that sales had fallen – indicating the patchiness of the recovery. On balance, retailers were the most optimistic they had been since July 2007, with almost a fifth of respondents predicting better figures for 2010.

In contrast, US consumer spending has taken another bashing; a decline attributed to fears over rising US unemployment levels as the economy slowly emerges from contraction. The US jobless rate for September stood at 9.8% of the workforce; the worst level in 26 years. The housing market actually grew by 1.2% in August, possibly on the back of recent tax cuts. Time will tell if any recovery in the housing market will be sustainable aginst the back-drop of rising unemployment and falling consumer confidence. The US average house price is still down by 11.4% year-on-year according to figures released for August. Consumers will need to be pretty confident about the security of their futures before committing to new home loans – despite the record low interest rates currently available.