CONSTRUCTION SLIDE BEGINNING TO BOTTOM OUT? - No surprise this morning to hear that business conditions continue to weaken in the construction sector. According to Ulster Bank's Construction Purchasing Managers Index for April, employment declined and activity fell. Activity in each sector declined, with housing the worst hit again last month. The report points to one positive factor however, that the decline in commercial activity appears to have reached the bottom.
Lynsey Clemenger, economist at Ulster Bank, says that the index shows that while activity continued to contract, it did so at a slower pace than in previous months. She points out that after an especially weak period, the index is now back where it was in August 2008. The economist says that the housing element of the index levelled off about a year and a half ago and there are now some early signs that commercial sector activity has now done the same. However, a further worsening in civil engineering activity can not be ruled out at this stage, she adds. There was also some signs of improvement in the employment segment of the index, with the pace of decline there bottoming out.
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EURO RISES ON ECONOMIC RECOVERY HOPES - The euro has strengthened against the dollar ahead of key reports this week that are expected to show that the world economy is starting to improve. John Beggs at AIB says talk of 'green shoots of recovery' across the global economy benefits the euro and other currencies against the dollar because investors become less risk-averse and therefore they start moving back out of the dollar. Because of improved prospects for economic growth, oil prices are beginning to rise - another negative factor for the dollar, Mr Beggs says. He says that sentiment more than anything else is driving the euro to a seven-week high against the dollar.
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MORNING BRIEFS - According to a survey by Reuters, the US economy is expected to start growing again in the second half of this year, while the jobless rate is expected to peak in the first three months of 2010. The forecast predicts economic growth, measured by gross domestic product, will shrink by 2.8% this year, but grow 1.9% in 2010. After sharp declines late last year and early this year, the survey says growth is expected to resume in from July onwards.
*** Those expectations of an upturn have seen the price of oil rise to a near a six month high, above $58 a barrel in recent days, on hopes that energy demand will rebound alongside a global economy recovery. Oil rose by more than 3% on Friday, but slipped 18 cents to $58.45 this morning.
*** Chinese inflation weakened further in April, with the consumer price index falling 1.5% from a year ago.
*** On the currency markets this morning, the euro is trading at $1.3632 cents and 89.59 pence sterling.
