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Economic News June 7: Taking Stock Of The Latest Global Economic Data Or News

Much of the economic news coming out of the US, Europe and China lately has largely been a disappointment but not all of the economic news has been bad as there are reasons to also remain cautiously optimistic. Hence, here is a quick compilation of the latest economic news impacting the global economy:

  • The Fed's US Economic Survey. On Wednesday, the Federal Reserve released a survey based on anecdotal information from the Fed's 12 regional banks covering April 3 to May 25 that seemed to give a more optimistic take on the US economy. For New York, Boston, Richmond, St Louis, Minneapolis, Kansas City, Dallas and San Francisco, there appears to at least be moderate growth. Boston, Dallas and San Francisco also noted activity in the IT sector - including continued demand or even some hiring. Cleveland and Chicago also reported stability or growth in the manufacturing sector while Boston, New York, Philadelphia, St Louis and Dallas reported improvements in their housing sectors.
  • China Cuts Lending Rate Too Stall a Slowdown. Late Thursday China time, the People's Bank of China announced that the regulated one-year corporate lending rate would fall to 6.31% from 6.56% on Friday. The one-year deposit rate will also fall from 3.5% to 3.25% - a move that will also hurt savers. However, the signs of economic stress in China are apparently becoming more obvious as the New York Times has reported that factories are closing while the work week at construction sites in inland provinces have been cut from three shifts a day to just one.
  • Capital Flows to Emerging Markets Expected to Slow. On Thursday, the Institute of International Finance said that it expects net capital flows to emerging markets to fall this year thanks to the European debt crisis. Specifically, the IIF expects net capital flows to emerging economies to fall by $100 billion to $912 billion. However, this figure is still better than a previous estimate of just $746 billion given back in January.
  • ECB Chief Sees a Gradual Recovery. Mario Draghi, the head of the European Central Bank, has recently said he is staying with his forecast for a gradual economic recovery this year in the Eurozone but the debt crisis also means increased "downside risk" to growth. Moreover, the ECB has left its growth projection unchanged at between 0.5% and 0.3% for the year. However, there is still plenty of trouble brewing as the crisis seems to have moved from Greece to Spain and could easily move to another country later this year.
  • Australia Continues to Add Jobs. On Thursday, the Australian Bureau of Statistics announced that a net 38,900 jobs were created last month, a figure that defied predictions of no growth in jobs. However, the unemployment rate did rise from 5% to 5.1% as apparently more people looked for work. Nevertheless, Australia has one of the lowest unemployment rates in the developed world.

In other words, the wheels on the global economy have not exactly fallen off like during the 2008 financial crisis but we are far from being out of the words just yet as plenty can still go wrong. Hence, keep an eye on the latest headlines and be sure to check our stock forecasts for the stocks you trade as there is still bound to be plenty of volatility in the months ahead.