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BOV Market Watch - Week ending 23rd October 2020
23 Oct 2020

Fed's Beige Book sees modest growth, recovery uneven. The US economy continued to grow across the country as it recovered from the coronavirus pandemic, but the picture was uneven, according to the Federal Reserve Beige book. “Changes in activity varied greatly by sector,” the central bank said in its survey released on Wednesday. “Economic activity continued to increase across all districts, with the pace of growth characterised as slight to modest in most districts.” The Beige Book is based on information collected by the Fed’s 12 regional banks through October 9. The US economy’s rebound has shown some signs of abating in recent weeks as the fiscal stimulus passed in early spring has expired and Covid-19 makes an autumn resurgence. The most recent economic data has been mixed, with consumer spending rising while jobs gains have slowed.

US leading indicator decelerates in September.  The Conference Board reported on Thursday a slowdown in the pace of growth of its leading economic indicators. The Conference Board said its leading economic index notched up 0.7 percent in September after surging by a revised 1.4 percent in August. Economists had expected the index to rise by 0.6 percent compared to the 1.2 percent jump originally reported for the previous month. The continued increase was driven mainly by declining unemployment claims and rising housing permits. "The US economy is projected to expand in Q4, but at a substantially slower rate of 1.5 percent (annual rate) according to The Conference Board's GDP forecast," said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board.

UK inflation rises as economy braces for new restrictions. Annual inflation in the UK accelerated in September, as the end of the government's food discount scheme boosted restaurant and café prices, official data by the Office for National Statistics showed on Wednesday. Consumer prices rose by 0.5 percent on year in September compared with a 0.2 percent rise in August. Month-on-month, consumer prices advanced by 0.4 percent, offsetting a 0.4 percent fall in the previous month. Prices were forecast to gain 0.5 percent. With inflation just 0.5 percent in September and new Covid-19 restrictions darkening the economic outlook again, it is hard to think of reasons why the Bank of England won't launch another GBP 100 billion or so of quantitative easing at the policy meeting on November 5,  Paul Dales, an economist at Capital Economics, said.

China's economy continues to rebound after virus slump. China's economy continued its recovery from the Covid-19 pandemic during the third quarter, latest official figures show. The world's second-biggest economy grew by 4.9 percent in the three months ended September, compared to the same quarter last year. China is now leading the charge for a global recovery. The third quarter growth is a far cry from the slump the Chinese economy suffered at the start of the year when the pandemic first emerged. For the first three months of this year China’s economy shrank by 6.8 percent in the aftermath of nationwide shutdowns. It was the first time China’s economy contracted since it started recording quarterly figures in 1992.

Australia manufacturing activity decelerates in October. A preliminary IHS Markit survey showed that Australian manufacturing activity expanded in October at a weaker pace than last month and also missed estimates, as coronavirus-driven lockdowns in parts of the country continued to hamper economy recovery. The survey revealed a manufacturing PMI score of 54.2. That is down from 55.4 in September, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. However, the services activity rose solidly in October, building on a mild gain in September with the services PMI rising to 53.8 from 50.8 last month.

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Bank of Valletta p.l.c. is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap.370. of the Laws of Malta).