Gloomy economic sentiment proved by disappointing figures

07-03-2009 10:23

Outlooks for a swift improvement of the economic situation have been reduced by weak economic figures, such as the US employment data, ending the week rather gloomy. The economy continues to struggle to overcome the slump as US job losses surpassed the forecasts, while figures concerning the Eurozone retail sales and PMI confirmed the current economic mood.

Wake up call

The US employment figures of Thursday were the main cause for the Asian and European equities to drop, while this Friday’s Independence Day resulted in a rather calm trading session. “Payrolls should be considered as a serious warning,” commented Jacques Henry, an analyst at Louis Capital Markets. “The figures prove that the economic improvement still is vulnerable and more negative figures are ahead, especially concerning employment.”

Eurozone retail sales

Markit, a financial information services company, reported today that the Eurozone Services Purchasing Managers Index remained almost unchanged and dropped from 44.8 in May to 44.7 in June. The worldwide economy is still struggling to pull out of the slump, proved by Eurozone’s retail sales of May, which fell 0.4% on a monthly basis, more than was forecasted.

Constrained liquidity

The gloomy sentiment has been confirmed by Peter Straarup, CEO at Danske Bank, by stating that the economic improvement will be a sluggish process as a result of the limited liquidity of the banks. “The end of the recession could still be far away and when it bottoms the growth will be restrained,” according to Straarup. Richard Burrows, CEO at the Bank of Ireland, commented that they suffered a “complicated phase ahead”, dominated by reduced business activity.