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July ISM numbers show U.S. business activity remains strong

Although the ISM Manufacturing index in the US dropped back a little to 52.6 in July, it remained well above the low levels recorded at the turn of the year. The Non-manufacturing index moved back down as well but remained at relatively healthy levels. The rebound in the ISM Manufacturing index over the past few […]

US wages continue to rise at a gentle pace

The US Employment Cost Index increased by 0.6% quarter-on-quarter and by 2.3% year-on-year in the second quarter, in line with expectations. Potential domestic wage pressures in the US remain hard to analyse. The unemployment rate has fallen sharply, and most other labour market indicators have improved. Although there is much discussion about the slack remaining […]

Soft US GDP figures cause us to cut 2016 growth forecast

US GDP grew by a surprisingly soft 1.2% (quarter on quarter, q-o-q, annualised) in Q2, well below consensus expectations of 2.5%. Moreover, growth in Q4 2015 and Q1 2016 was revised noticeably lower. Year-on-year growth in Q1 was revised down from 2.1% to 1.6%. In Q2, consumer spending grew by a strong 4.2% and final […]

US retail sales solid in June, very strong in Q2 overall

Core retail sales in the US increased by 0.5% month-on-month in June, above consensus expectations. Moreover, April and May numbers were revised up by a cumulative 0.1%. The result was that core retail sales grew by a very strong rate of 7.4% quarter-on-quarter (q-o-q) annualised in Q2 2016, much higher than the 2.8% rise seen […]

Pick-up in U.S. job creation in June masks slowdown in Q2 as a whole

The US Labor Department’s employment report for June showed nonfarm payrolls rising by a strong 287,000 in June, well above consensus expectations. However, this followed a very weak number for May (11,000, revised down from 38,000). Job creation slowed noticeably in Q2 overall. Meanwhile, the unemployment rate bounced back from 4.7% in May to 4.9% […]

US GDP growth expectations tilted to the upside

Real consumer spending in the US rose by a healthy 0.3% month over month in May, according to the Bureau of Economic Analysis (BEA) on 29 June, beating consensus expectations. Moreover April’s number was revised up, so that between Q1 and April-May, US personal consumption grew by an astonishing 4.8% annualised. All this supports our […]

Brexit means the Fed will act even more cautiously

Read full report here So far, the UK vote to leave the EU has only led to a modest tightening in US monetary and financial conditions. Nevertheless, Brexit will probably mean lasting upward pressure on the US dollar and on US financial conditions. The UK absorbs less than 4% of US exports and the total of […]

Disappointing U.S. jobs report means Fed may wait before hiking rates

Read full report here The May US employment report released on 3 June was clearly weak. Job creation surprised heavily on the downside (with downward revisions for the previous two months), and the unemployment rate fell, but for ‘bad’ reasons (a fall in the participation rate). Moreover, the pace of wage increases year over year […]

U.S. consumer spending turning out to be quite strong

Read full report here As widely expected, US consumer spending data for April were quite strong. The data, released on 31 May, showed that real personal consumption rose by a strong 0.6% month-on-month, slightly above consensus estimates (+0.5%). Data on April retail sales, car sales and output of utilities already published had been quite upbeat, […]

Inflation pressures in the U.S. are still contained

Read full report here As widely expected, core Personal Consumption Expenditure (PCE) inflation in the US came in at 1.6% in April, the same rate as in March. Overall, we continue to believe that year-on-year (y-o-y) PCE core inflation — a key price measure for the Fed — will end this year at around 1.9%, i.e. […]

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