Due to technical problems this report will be available next Monday

The US house price index showed an unexpected rise in February. On a monthly basis, house prices rose by 0.7% M/M, while a decline by 0.7% M/M was expected. The previous figure was downwardly revised from 1.7% M/M to 0.7% M/M. This is the second consecutive increase after ten straight declines and raises expectations that the housing market is bottoming out, which is a positive development for the overall economy.


Other: UK budget deficit biggest since World War II

In the UK, jobless claims rose by 73 700 in March, while an increase by 116 000 was expected. The previous figure was slightly downwardly revised from 138 400 to 136 600. In February, the ILO unemployment rate rose from 6.5% to 6.7%, in line with expectations. Also worth mentioning is the development in earnings with average earnings incl bonus falling from 1.7% Y/Y to 0.1% Y/Y and average earnings excl bonus dropping from 3.5% Y/Y to 3.2% Y/Y. Although the figure came out better than expected, the total number of people unemployed rose to 1.46.

In March, the UK public sector net borrowing came out at £19.1B, significantly above the consensus estimate of £15.5B and the previous figure of £9.0B. The bigger than expected deficit was due to a 12.1% drop in tax income, with corporate taxes plunging by 55%, while value added tax dropped 17%. Spending rose by 2.4%, especially due to a 16% jump in social benefits. The British budget deficit is now the biggest since World War II in the fiscal year through March and is expected to worsen in the coming months.

At its April meeting, the Bank of England’s Monetary Policy Committee decided to keep rates unchanged at 0.50%. The Minutes revealed, as expected, a unanimous vote in favour of the proposition to maintain rates unchanged at 0.50%. The Committee had agreed to review the scale and timing of the asset purchase programme each month. In April, the Committee agreed that there had been no material change in the conditions as the degree of uncertainty remained high over the appropriate scale of asset purchases. The Bank added that the effects of the asset purchase programme had been encouraging and the falls in yields might increase as additional assets were purchased. The Monetary Policy Committee became a bit less pessimistic about the economy, but concluded that the risks to the domestic economy remained weighted to the downside.