6 March 2020
Fed ‘Beige Book’ shows business worried about coronavirus. A compilation of anecdotal evidence on economic conditions in the twelve Federal Reserve districts said Wednesday that US economic activity expanded at a modest to moderate pace over the past several weeks. Threats from the coronavirus specifically did not seem to pose a major threat as yet, though business contacts said they were worried about potential ramifications to come. The report said there were indications that the coronavirus was negatively impacting travel and tourism in the US, with growth in tourism described as flat to modest.
Eurozone private sector growth at six-month high, though concerns lie ahead. The eurozone private sector growth reached a six-month high in February, as initially estimated, despite the outbreak of the coronavirus, final survey data from IHS Markit showed on Wednesday. The IHS Markit’s Composite Purchasing Managers’ Index, or PMI, for the countries that share the euro currency, inched up to 51.6 last month from January’s 51.3. That matched an earlier flash reading and was well clear of the 50-level that separates growth from contraction. “The eurozone economy showed resilience to disruptions arising from the coronavirus outbreak in February, but dig deeper into the data and there are signs that problems lie ahead,” said Chris Williamson, chief business economist at IHS Markit. A sub-index measuring new export business dropped to 47.5 from 49.2 and, as they have for a year, firms turned to completing backlogs to sustain some activity.
Coronavirus set to deal heavy blow to Italy's ailing economy. Italy’s gross domestic product (GDP) contracted by 0.3 percent in the last quarter of 2019, the biggest drop in six years and reversing a 0.1 percent expansion in the third quarter. The impact of the coronavirus could aggravate the situation in the coming months as the outbreak directly affects sectors such as tourism, which in addition to exports, is one of the sectors that most underpin the country’s economy and one of the most vulnerable to the outbreak. On a yearly basis, the Italian economy grew by 0.1 percent instead of flat growth estimated initially. Nonetheless, this was slower than the 0.5 percent expansion logged in the third quarter.
UK car sales decline in February. Demand for new cars in the UK fell by 2.9 percent in February, the automotive industry said. Some 79,594 new cars were registered in February compared with 81,969 during the same month in 2019, according to the Society of Motor Manufacturers and Traders (SMMT). The trade association blamed weak consumer confidence and confusion over what fuel technology to buy. The decline was driven by a 7.4 percent drop in demand from private consumers. Sales of diesel and petrol models were down 27.1 percent and 7.3 percent respectively year-on-year. SMMT chief executive Mike Hawes said: “Another month of decline for the new car market is especially concerning at a time when fleet renewal is so important in the fight against climate change.”
Australia’s central bank cuts interest rates as retail sales falls. The Reserve Bank of Australia cut interest rates to 0.5 percent, a record low. Governor Philip Lowe said the coronavirus outbreak is having a "significant effect" on the Australian economy and is expected to delay progress towards full employment and the inflation target. He predicted weaker GDP for March than expected. Meanwhile, the value of retail sales in Australia was down a seasonally adjusted 0.3 percent on month in January, the Australian Bureau of Statistics said - coming in at A$27.632 billion. That missed forecasts for a flat reading following the downwardly revised 0.7 percent decline in December.