LONDON/WASHINGTON - June 15, 2009 - The head of the International Monetary Fund (IMF) warned on Monday it might be too soon to discuss rolling back stimulus spending, saying the world economy had yet to weather the worst of a Depression that has hammered industrial output and claimed a record number of European jobs.
Reinforcing that view, the factory sector in the State of New York shrank at a more severe rate in June than the previous month, the New York Federal Reserve said in a report.
The New York Fed's "Empire State" general business conditions index fell to minus 9.41 in June from minus 4.55 in May. The survey of manufacturing plants in the state is one of the earliest monthly signposts to U.S. factory conditions.
"We've got a little bit of cold water thrown on the manufacturing sector's recovery after seeing some persistent improvements," said Eric Lascelles, chief economics and rates strategist at TD Securities in Toronto, Canada.
In southern Italy, Group of Eight finance ministers meeting over the weekend described their economies in the most positive terms since the collapse of U.S. bank Lehman Brothers nine months ago heightened the world's worst financial crisis since the Great Depression of the 1930s.
"Their (G8) stance is that we are beginning to see some green shoots but nevertheless we have to be cautious," IMF chief Dominique Strauss-Kahn said during a visit to Kazakhstan. "The large part of the worst is not yet behind us.
"We see ... a recovery towards the beginning of 2010, 2009 is already done, we know it's a bad year," he said. "At the global economic level, the growth will be -1.3 (percent), which is the first negative growth since the (Great) Depression."