But the odds are that the ECB move will be a one and only upward push: Bank President, Jean Claude Trichet said after the decision was revealed that the bank had no bias for future actions. he didn't use words like 'vigilance' which are seen as code for being on the brink of another rise. In struggling Britain figures were released confirming that the country's services sector contracted last month, joining manufacturing in slumping.
And the Bank of England released a report showing that UK banks plan to cut credit to business and consumers in coming months: consumers have already started cutting their demands by slashing demand for home mortgages.
Shares fell in Asia (but not China and Taiwan, which were higher). Markets were lower in Europe before and after the ECB's move, which now puts extra pressure on the US dollar and the US Federal Reserve. Wall Street rebounded a touch as commodities (bar oil) eased.
Before the ECB announcement, the Riksbank in Sweden – which is not part of the eurozone - increased its main rate 0.25% to 4.5%, warning that its rate could hit 5% by the end of this year with two more increases. The new rate is a 12 year high. Brent crude oil in London hit $US146 a barrel for the first time before the ECB's move with the August contracted reaching an all time high of $US146.34.
New York's main oil contract, light sweet crude for August delivery, surged past $US145 for the first time to reach $US145.43 a barrel. It closed at $145.03 a barrel, a record. The latest increases came after Iranian Oil Minister Gholam Hossein Nozari had warned his country, a key oil producer, would react fiercely to any attack against it.
Ali Naimi, the Saudi oil minister, said on that a number of factors were driving oil prices higher, including a large flow of financial money, the weakness of the US dollar, geopolitics and fears that the world is running out of oil.
Saudi Arabia this month increased its production to 9.7million barrels a day, the highest level since mid-1981, in an attempt to lower prices. But its efforts have been offset by supply falls in Nigeria, Mexico, the North Sea and, to a lesser extent, Russia.
The June job losses were concentrated in manufacturing and construction, two sectors that have been badly battered in the current economic downturn. (Although manufacturing has been going gangbusters in the export sector).
Manufacturing lost 33,000 jobs, but the troubled auto and auto parts makers posted a modest gain.That will change from this month onwards, meaning more upward pressure on unemployment numbers.
Construction lost 43,000, with about half of that coming from contractors and subcontractors in the home building segment of the market, which has been a feature of the figures from January. But the job losses were not limited to those areas. Retailers trimmed 7,500 jobs, while business and professional services cutting 51,000 jobs.
The services sector though added jobs: government employers added 29,000 jobs, education and health services, which also added 29,000, and leisure and hospitality, which saw a 24,000-job increase.
Economists said the figures were further proof that the nation has fallen into a recession. The seasonally adjusted average hourly wage edged up 6 cents to $US18.01, which was in line with forecasts, while the average hourly work week stayed unchanged.
Wages are not keeping pace with inflation, as the average wage is now up 3.4% over the last 12 months, less than the 4.5% rise in prices over the 12 months ended in May as reported by the government. A separate report showed the huge US service sector contracted last month (as it did here, in Europe and in Britain) .
The Institute for Supply Management's (ISM) non-manufacturing index fell to a reading of 48.2 from 51.7 in May. Economists were expecting a reading of 51. A reading above 50 indicates growth in the sector, and a reading below 50 represents a sector-wide decline.
Job market sluggishness, coupled with oil prices that are up more than 50% from the previous year are hurting business confidence and activity. Economists say the survey means there's every chance economic growth will contract in coming quarters, meaning a recession instead of a rebound.
