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Industrial Production (Apr.)

The 0.8% rise in manufacturing output last month underlines that it is not just consumer spending powering the economy forward. While the survey evidence suggests global manufacturing demand is cooling, the gradual easing of input shortages over recent months is helping to keep output growth strong.
Michael Pearce Senior US Economist
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US Data Response

Durable Goods (May)

The surprisingly robust 0.7% rise in durable goods orders last month was much better than some of the downbeat survey evidence had suggested and is consistent with business equipment investment growth slowing in the second quarter rather than going into reverse.

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Fed refuses to blink, as growth fears mount

Chair Jerome Powell signalled this week that the Fed will press ahead with its planned series of aggressive interest rate hikes, even as evidence mounts that economic growth will be weak in the second half of the year.

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Recession fears overdone

The surge in interest rates, plunge in the stock market and weakness of consumer confidence have fuelled fears of an impending recession, but there is still little sign of that in the incoming economic data. The coincident indicators used by the NBER to identify economic turning points show continued growth. The strength of payroll employment growth, which is averaging close to 400,000 per month, is particularly hard to square with claims that a recession is imminent. Admittedly, with inflation rampant, that is likely to keep the Fed raising interest rates aggressively, including another 75bp hike in July. But with underlying demand still strong, a slowdown in growth is still the more likely outcome.

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More from Michael Pearce

US Economics Update

Labour market conditions remain tight

While the job openings and quits rates both edged up again in March, the bigger picture remains that labour market conditions have been stable over the past nine months or so, with few signs that shortages have begun to ease markedly, with the notable exception of the leisure & hospitality sector. That will maintain pressure on the Fed to raise rates aggressively until we see clearer signs that labour market shortages are beginning to ease.

3 May 2022

US Data Response

ISM Manufacturing Index (Apr.)

The decline in the ISM manufacturing index to a 20-month low of 55.4 in April, from 57.1, is mostly due to weakening demand amid a broader slowdown in global manufacturing, rather than a renewed supply crunch.

2 May 2022

US Data Response

Durable Goods (Mar.)

The solid increase in durable goods orders in March reflects both easing supply shortages as well as strong underlying investment demand. Business equipment investment is usually one of the more rate-sensitive parts of the economy, but tight labour markets and elevated capacity utilisation rates this early in the cycle mean we expect investment growth to hold up quite well.

26 April 2022
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