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EU business surveys showed that business confidence continued to improve in December
Business Climate Indicator further improves
The Business Climate Indicator (BCI) for the Eurozone improved further in December - - its ninth consecutive monthly increase. But it remains at a low level, suggesting that year-on-year growth in industrial production was still negative in November. The significant increase in the BCI reflects an across-the-board improvement in managers' assessments: the perception of the production trend observed in recent months and order books went up strongly, while the rise in export order books and production expectations were not as pronounced. The declining level of stocks confirmed further destocking.
Economic Sentiment Indicator continues to improve
The Economic Sentiment Indicator (ESI) rose once again in December to 92.0 (+4.1 points) in the EU and to 91.3 (+2.5) in the Eurozone. It has improved in both areas for nine consecutive months since its trough in March 2009, though it still remains below its long-term average.
The majority of Member States reported a general improvement in sentiment. Among the largest Member States, the UK reported a sharp increase (+8.2 points), followed by France (+4.1), while the improvements were less marked in Italy (+2.9), Germany (+1.7) and Spain (+1.2). Sentiment in the Netherlands remained unchanged and decreased slightly in Poland (-0.6).
Sentiment in industry, which increased by 3 points in both the EU and the Eurozone, remained the main contributor to the overall improvement. While most respondents in this sector reported strong improvements in their order books, they appear to have scaled back their production expectations. The declining level of stocks, especially in the automotive sector, confirmed further destocking.
Services increased by 1 point in the Eurozone and by 6 points in the EU, the latter owing to a strong increase in UK services sentiment. Confidence among consumers improved by 1 point in both areas, as unemployment fears faded. Mirroring this outlook, employment expectations picked up in industry and services. No major development was noted in retail, which remained unchanged in the EU and increased by 1 point in the Eurozone. Construction declined by 1 point in the EU and by 2 points in the Eurozone.
Confidence in financial services - - which is not included in the ESI - - remained broadly unchanged in the EU and declined by 2 points in the Eurozone, where managers' assessment of the business situation over the past three months was significantly more negative than in last month's survey.
Irish tourism
Fáilte Ireland said today that revenue from tourism last year fell to €5.2 billion - - a dip of almost 17% from 2008 and the lowest level since 2004.
In its review of last year and outlook for next year, the agency said the the fall in revenue resulted from difficult conditions in the important UK and US markets, as well as intense competition which drove accommodation prices down.
A Fáilte Ireland survey of tourism businesses found that they were slightly more optimistic about 2010, with almost two-thirds expecting business to be similar to or better than 2009. This was up from 20% in a similar survey last year.
Chairman, Redmond O'Donoghue said Fáilte Ireland was focusing on supporting tourism businesses and jobs through the next 12 months to be ready for a recovery which could being in the second half of the coming tourist season.
Fáilte Ireland's figures show that the number of people visiting Ireland fell by 12% last year, while the number of home holiday trips taken fell by 5% to 7.9 million - - the first such decline in the past decade.
Numbers from the UK dropped 16%, and their spending slumped by 24%, hit by the weakness in sterling. North American visitors were down 8%, with spending down 7%. Arrivals from the rest of Europe were also down 8%, but the more traditional markets in western Europe showed much smaller falls, with Italy showing a 19% increase. Revenue from European tourists dropped by 21%, however, due to shorter stays and more cautious spending.
Fáilte Ireland registered 16 new hotels last year, but when closures were taken into account, the number of hotel beds in the country fell by 410.
Bank of England
The Bank of England today held interest rates at a 1694 year low.
The Bank of England’s Monetary Policy Committee kept the benchmark interest rate at 0.5%. The MPC voted to continue with its programme of asset purchases/money printing totalling £200 billion financed by the issuance of central bank reserves.
The Committee expects the announced programme to take another month to complete. The scale of the programme will be kept under review.
As Greece vows to tackle its budget deficit, Marion Dezenter from Helaba considers the outlook for the EU country:
UK new car sales
UK new car sales in Britain surged 38.9% in December, boosted by a government-backed scheme subsidising the cost of buying vehicles, the Society of Motor Manufacturers and Traders said today.
The number of new cars sold rose to 150,936 last month, SMMT said in a statement. They had soared by jumped 58% in November.
SMMT's chief executive Paul Everitt said that sales were boosted in December by Scrappage Incentive Scheme and by consumers looking to avoid this month's increase in VAT.
The scrappage scheme, which allows car-owners to trade in a 10-year-old vehicle for a £2,000 sterling discount on a new car, helped to realise almost two million registrations in 2009.
Everitt added that 2010 would be another tough year for the UK motor industry "with new car registrations expected to be below 2009 levels and only limited recovery in the van and heavy commercial vehicle markets."
China
China's central bank today unexpectedly raised a key interbank market interest rate. It was the first rise in nearly five months, signaling a change in its policy focus.
The tightening move, came in the form of a higher yield in its weekly bill sale and was less than a day after the People's Bank of China hinted its priorities had shifted toward managing inflation expectations and away from single-mindedly supporting economic growth.
Simon Johnson, an economist at MIT Sloan School of Management, says the crisis is just beginning:
US
New claims for jobless benefit rose to 434,000 in the week ended Jan. 2nd, from a 16-month low of 433,000 the prior week, the Labor Department said today. Following the end of the holiday period, this was a good result.
The four-week moving average of initial claims, which aims to smooth out volatility, fell to 450,250 last week, the lowest since the Sept. 13, 2008, from 460,500 in the prior week. Claims have dipped 36% since reaching a 26-year high of 674,000 in the week ended March 27th.
The Labor Department will issue the December Employment report on Friday.
The Wall Street Journal reports that overall, US retailers' December sales at stores open at least a year rose 2.9%, much better than Wall Street's 2% projection, according to Thomson Reuters.
A range of retailers raised estimates, including Macy's Inc., discounter Target Corp., Victoria's Secret owner Limited Brands Inc. and teen retailer American Eagle Outfitters Inc. Retailers had set their sights low when they offered fourth-quarter outlooks during late fall.
On the markets, the Dow has gained 6 points Thursday.
There have also been just slight movements in the other major measures.
On the New York Mercantile Exchange, oil for February 2010 delivery is trading at $82.72 down 46 cents from Wednesday's close. In London, Brent crude for February delivery is trading at $81.65 a barrel.
Currencies
The euro is trading at $1.4308 and at £0.8993.
For live currency updates, check the right-hand column of the Finfacts home page.The dollar traded at a record low $1.6038 per euro on July 15, 2008.
