Significant improvement in U.S. economic data.

Positive economic data in the U.S. indicate an increase in growth, in spite of the tax raise at the beginning of the year and the fear of the automatic cuts entering into force early March.

U.S. February Jobs Report was surprisingly good. U.S. employment data (Non-Farm Payroll) showed a net increase of about 236,000 jobs during February, transcending an estimation of only 165,000.

Monthly recruitment rate for the last two months was revised downward by 15,000, however the three months average was higher than Q3 and Q2 of 2012 respectively, standing at about 191,000 jobs.

We mention that in Q1 2012, monthly recruitment was a 262,000 average, so it is not yet certain if this is indeed a long-term change of trend.

Unemployment dropped to a level of 7.7%, its lowest level in the last four years.

Significant improvement in U.S. economic data.

Significant improvement in U.S. economic data.

More in February, the ISM Non-manufacturing index rose to a 12-month high.

The index ascended to 56.0 versus an expected 55.0 and a level of 55.2 in January, serving as further evidence for the rise in U.S. economic activity.

We mention that a fine increase was recorded in the corresponding manufacturing sector index.
Negatively, we mention a widening in U.S. trade deficit to $44.4 billion, higher than last December’s $38.1 billion, and the expected $42.6 billion.

The relatively high trade deficit in January may have had a mild negative impact over the U.S. economy’s growth in the first quarter.

We further mention that exports in January dropped by a 1.2% Monthly rate.

Imports increased in January by a 1.8% Monthly rate, mostly due to an increase in oil import’s volume.

Regarding U.S. monetary policy:

Two weeks ago, the Fed’s chairman Bernanke expressed his support in the continuation of implementing the quantitative easing policy (QE3) of the fed.

This week, the Fed’s Vice’s Janet Yellen took a similar approach when she made a public statement about her support of the continuation of the quantitative easing program, and said “at present, I view the balance of risks as still calling for a highly accommodative monetary policy to support a stronger recovery and more-rapid growth in employment”.

On the efficacy of purchases, Yellen further elaborated on how she saw the Fed’s purchase programs as leading to a significant boost to both the housing market and auto sales.

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