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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. […]

US improving, but constraints on Fed rate hikes

After a habitually disappointing first-quarter GDP figure of 0.5% (first estimate, to be revised on May 27), we expect a significant pick-up in US GDP to about 2.5% in the second quarter, not least because of strong consumer spending, which, according to our estimates, could grow by 3.0% in Q2 2016. Admittedly, consumer spending in […]

Surprisingly hawkish FOMC minutes unsettle observers

Read full report here The minutes of the April Federal Open Market Committee meeting published on 18 May surprised by their hawkish tone. The key phrase that unsettled observers was that should conditions continue to improve, “it likely would be appropriate for the Committee to increase the target range for the federal funds rate in […]

Core U.S. retail sales surge

Read full report here The US retail sales report for April was very encouraging, with core retail sales increasing strongly month on month (m-o-m) in April, while the figures for February and March figures were revised upward. Consumer spending growth should approach a strong rate of 3.0% q-o-q annualised in Q2. According to the US […]

US Job gains softer than expected in April

Read full report here April’s US employment report was mixed. Job creation was relatively soft and the unemployment rate remained stable for ‘bad’ reasons. However, in the current economic context, employment growth remains healthy overall. Wage numbers were relatively upbeat, and the proxy for household income was quite strong. In light of the figures released […]

Recent rebound in ISM indices confirmed in April

Read full report here The US ISM Manufacturing survey for April 2016, published on May 2, dropped back a little, from 51.8 in March to 50.8, below consensus expectations (51.4). However, the level recorded in March was an eight-month high. And the April figure is well above the lows registered at the turn of the […]

The Fed is likely to wait until September before hiking rates

Read full report here In Friday's report on income and consumption, data were also published on the PCE deflator, the price measure targeted by the Fed in gauging inflation. The core PCE price index (excluding food and energy) increased by 0.1% month-on-month (m-o-m) in March, in line with consensus expectations. On a year-on-year (y-o-y) basis, core […]

US Q1 growth disappoints, but improvement likely

Read the full report here US real GDP, buffeted by numerous headwinds and lacking momentum, grew by a feeble 0.5% in Q1 2016. Seasonality factors mean the first-quarter GDP growth rate can be very volatile, but Q1 growth was a clear disappointment overall, particularly as growth in Q4 2015 was already soft (+1.4% q-o-q annualised). […]

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