The move was widely expected after BoE Governor Mervyn King said last month the economic outlook had deteriorated since the BoE called a halt to its second round of asset purchases - also known as quantitative easing - in May.
The BoE has bought 325 billion pounds of government bonds to date, and the purchases announced on Thursday take this total to 375 billion.Although Greek elections last month avoided a worst-case outcome of a government vehemently opposed to the country's bailout, the eurozone debt crisis continues to fester and is increasingly weighing on the global economy.
The European Central Bank is widely expected to cut interest rates when it announces its policy decision at 1145 GMT, although the BoE kept its interest rate on hold at 0.5 per cent, where it has been since March 2009.Britain's economy has been in recession according to official data since late last year, and private-sector data is also showing a slowdown.
Inflation has fallen more than expected to 2.8 per cent, easing some of the concerns that caused the BoE to halt stimulus in May, though it is still well above its 2 per cent target.The QE stimulus follows joint measures announced by the government and BoE last month to improve the flow of credit to businesses, and to ensure banks do not suffer from a lack of ready cash if the eurozone crisis deepens.
The BoE says its purchases of government bonds help the economy by encouraging other investors to buy riskier assets instead, making it easier for large companies to raise funds through bond or share issues. Critics argue the BoE needs to do more to boost the flow of credit to smaller companies.Read http://www.smh.com.au/business/world-business/bank-of-england-unleases-third-round-of-stimulus-20120705-21k8r.html
Service Industries In U.S. Probably Expanded At Slower Pace
Isn't this great news? More low paying service job are slowing as well. Guess that rule me out at Walmart and Burger King.Service industries in the U.S. probably grew in June at a slower pace, a sign the world’s largest economy is struggling to maintain momentum, economists said before a report today.The Institute for Supply Management’s index of non- manufacturing businesses, covering about 90 percent of the economy, fell to 53 from 53.7 in May, according to the median forecast of 63 economists surveyed by Bloomberg News. Readings above 50 signal expansion. Initial jobless claims last week stayed close to the highest level of 2012, other data may show.
Play VideoJuly 3 (Bloomberg) -- James Glassman, senior economist at JPMorgan Chase & Co., talks about the U.S. labor market and economy and the outlook for Federal Reserve monetary policy. Glassman speaks with Tom Keene, Sara Eisen and Scarlet Fu on Bloomberg Television's "Surveillance." (Source: Bloomberg)Companies from Family Dollar Stores Inc. (FDO) to FedEx Corp. (FDX) are seeing waning demand, underscoring concern about Europe’s debt crisis, cooling global markets and an absence of U.S. fiscal policy clarity that’s also hurting manufacturing. Limited hiring and income growth indicate households will be reluctant to step up purchases, which account for about 70 percent of the economy.“The outlook for consumer spending stays pretty soft,” said Ellen Zentner, a senior economist at Nomura Securities International Inc. in New York. “There is slow to no wage growth. Economic growth is still frustratingly slow.”http://www.bloomberg.com/news/2012-07-05/service-industries-in-u-s-probably-expanded-at-slower-pace.html
China’s New Rules May Curb Credit Growth, CBRC Official Says
China can make any rule it wants as they won't keep them anyway.China plans to retain a cap on loans at 75 percent of deposits and may add further requirements that constrain credit growth under draft rules, a senior official at the banking regulator said.The liquidity-risk management regulations may be more stringent than the loan-to-deposit ratio set by the nation’s commercial bank laws, the China Banking Regulatory Commission official said, asking not to be named because the discussions aren’t public. The comments refute a report in the Economic Information Daily, which said today that the ratio won’t be included in the new rules and may be scrapped.Enlarge image
The company logo for the Industrial & Commercial Bank of China Ltd. (ICBC) is seen outside a branch in Beijing, China. Photographer: Nelson Ching/BloombergEnlarge image
The China Banking Regulatory Commission (CBRC) seal is seen outside their offices in Beijing. Photographer: Nelson Ching/BloombergShares of banks fell in Shanghai on concern that the limits may curtail loan growth. The regulator is imposing controls to reduce the risk of defaults as policy makers cut interest ratesand lower lenders’ reserve requirements to arrest a slowdown in the world’s second-biggest economy.“The loan-to-deposit ratio has proved to be the most effective tool in reining in lending and preventing liquidity risks at Chinese banks,” said Luo Yi, a Shenzhen-based analyst at China Merchants Securities Co. “The government won’t let it go easily. All it needs to do is to not tightly enforce the ratio when the regulator really wants to ease credit.”Industrial Bank Co. (601166) slid 1 percent to 13.01 yuan and China Citic Bank Corp. fell 0.5 percent to 4.02 yuan, leading declines among lenders in Shanghai trading. The reaction inHong Kong was mixed, with shares of Bank of China Ltd. falling 1 percent to HK$2.91 while Industrial & Commercial Bank of China (1398) Ltd. rose 0.2 percent to HK$4.29.Slower Growth
Economic growth has slowed for five straight quarters, with gross domestic product expanding 8.1 percent in the three months ended March 31. That’s the weakest in almost three years. The central bank in June cut interest rates for the first time since 2008, and the government is accelerating approvals for investment projects.http://www.bloomberg.com/news/2012-07-05/china-s-draft-rules-may-curb-credit-growth-cbrc-official-says.htmlAnyone feeling hopeful?
Hopeful signs emerge for struggling jobs market
More BS about the hopelessness of the job market. Want to work in a cube answering 75 pleading customers tell you why they cannot pay their bills this month as a temp for 10.00/hour?(Reuters) - U.S. private employers stepped up hiring in June and the number of Americans filing new claims for jobless benefits last week fell by the most in two months, hopeful signs for the struggling labor market.
Employers outside government added 176,000 new workers to their payrolls last month, the ADP National Employment Report showed on Thursday, after increasing 136,000 in May.
The government will release its closely watched employment report for June on Friday. While ADP has a poor track record of predicting nonfarm payrolls, it was a welcome sign for the labor market.
Initial claims for state unemployment benefits dropped 14,000 to a seasonally adjusted 374,000, the Labor Department said. The four-week moving average for new claims, a better measure of labor market trends, fell 1,500 to 385,750.
"Jobless claims are a move in the right direction. The drop, combined with the ADP report earlier, suggests the jobs market is not as weak as recent data has suggested," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Nonfarm payrolls are expected to have increased 90,000 in June, according to a Reuters survey, after May's 69,000 gain.
The unemployment rate is seen steady at 8.2 percent after rising in May for the first time since August.
Job growth has weakened in recent months amid a cloud of uncertainty, spawned by the European debt crisis and fears of tax increases at home next year.
The struggling labor market prompted the Federal Reserve last month to ease monetary policy further by extending a program to re-weight bonds it already holds toward longer maturities to hold down borrowing costs.
"The Federal Reserve needs to see sustained improvement, like the claims moving back down toward 300,000 and a steady decline in the unemployment rate," said John Canally, an economist at LPL Financial in Boston.
"If we get a couple of more bad jobs reports, (Fed policymakers) will come in with more stimulus. Today's reports suggest they might hold off, but they will want to see more data before they decide."
New applications for unemployment benefits remain in a tight range, and the four-week average is still elevated, suggesting any improvement in the jobs market will only be gradual.
A Labor Department official said there was nothing unusual in the state-level data and only Alaska had been estimated.
The number of people still receiving benefits under regular state programs after an initial week of aid climbed 4,000 to 3.31 million in the week ended June 23.
The number of people on extended benefits fell 12,113 to 47,425 in the week ended June 16, the latest week for which data is available, as more states lost eligibility for extended benefits for the long-term unemployed.
Now only four states offer extended benefits.
Great so all you deadbeats use that last check for a tent and look for a park to pitch it in and a coleman stove for cooking and maybe a lantern and read books by lantern or candlelight just like Abe Lincoln. We've come a long way baby!http://www.reuters.com/article/2012/07/05/us-usa-economy-jobless-idUSBRE8640K120120705
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