Signs of hope for the economy

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The Independent Online
FURTHER tentative signs of economic recovery emerged on both sides of the Atlantic yesterday as sterling continued its surge on the markets and unemployment in the United States dipped to its lowest level in six months.

Sales of new cars in the UK, a barometer of consumer demand, also rallied for the second month in succession. Registrations in November rose by 6.3 per cent on their level a year ago to leave sales for the first 11 months of the year just 1.33 per cent down on the same period in 1991.

Encouraged by glimmers of economic optimism, the pound climbed 1.4 pfennings against the German mark to close at 2.4847 marks, up 7 pfennings on the week.

The US Labor Department announced that unemployment fell to 7.2 per cent in November. That compares with 7.4 in October and June's peak of 7.8. The department attributed the improvement to the creation of 105,000 new jobs in the non-farm sector.

Norman Lamont, the Chancellor, said sterling's rise reflected greater 'confidence in Britain's future'. But the Treasury denied that Mr Lamont was drawing a line below which he would not be prepared to see the pound fall.

There was less encouragement in UK house building figures, which showed that in the three months to October the number of housing starts was 7 per cent down on the same period in 1991.

Despite the recovery in car sales, the market is still expected to end the year a third down on its level in 1989 and more or less unchanged from last year's depressed level of 1.59 million.

Further job losses and short-time working are also in prospect, with Ford expected to cut the workforce at its UK car plants by 3,000 and Vauxhall preparing to switch to a shorter working week.