UK firms see more jobs despite weak economic outlook
British businesses expect to increase hiring over the next six months, but companies do not foresee growth in the economy. The U.K. economy could be in its third recession in five years although the strength in the jobs market has astonished economists. In other related news, the ratings agency Standard & Poor’s has reiterated the UK’s triple-A rating but has warned that the outlook for the UK economy remains negative. Meanwhile, U.K. house prices on Friday rose 0.2% in March, in line with market expectations and compared to a 0.5% increase reported in February.
In the U.S., the Dollar fell to a two-week low against the Euro, as United States jobs data for March raised fears that the rate of recovery has slowed in March with only 88,000 new jobs being created. The unemployment rate fell slightly, the Bureau of Labor Statistics announced, as 496,000 people stopped looking for work. The Federal Reserve chairman, Ben Bernanke has been injecting $85bn a month into the US economy with the aim of keeping interest rates low and encouraging investment in the jobs market.
On the FX market, although GBP/USD is set to remain a product of risk on/off sentiment is expected to be driven by the news flow out of the Eurozone. The affirmation of the AAA sovereign credit rating by S&P late Friday may help to offset some of the bearish sentiment and support the currency against the EUR. Nevertheless, the UK has its own demons to fight and it remains to be seen whether the government will be able to find a way to promote growth at a time when its main trade partner (Eurozone) is busy bailing out various nations.