The Chinese economy grew at a faster than expected rate during the first quarter of this year, even with the threat of trade wars overshadowing markets. It appears that recent government stimulus measures maybe beginning to take hold. GDP expanded 6.4 per cent in the first quarter, marginally ahead of expectations. Industrial production in March provided a big boost to China’s economy, rising 8.5 per cent year on year compared to just 5.3 per cent in the January-February period. However, economic reform has a long way to go particularly as authorities are concerned that too much stimulus would encourage excessive debt levels.
UK core inflation remained stable during March at 1.8 per cent, marginally below analysts’ expectations, while unemployment remains at the lowest rate since 1974. With a slowdown in workers coming from Europe, UK businesses have needed to seek new sources of labour.
The data also showed that average weekly wages, including bonuses, were 3.5 per cent higher during the three months than they were a year earlier. Although a lagging indicator, the labour market remains relatively robust. Earnings have now been growing ahead of inflation for over a year but, in real terms, wage levels have not yet returned to their pre-downturn peak.
In Europe, German authorities cut their growth forecasts in half for this year on the back of a sharp deterioration in trade prospects. Authorities expect growth of just 0.5 per cent in 2019, down from an earlier projection of 1 per cent. Manufacturers have come under pressure from weak global demand and political uncertainty.
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