International Trade (Jun.)

The widening in the trade deficit to $75.7bn in June, from $71.0bn in May, is unlikely to be sustained now that consumer goods demand appears to have peaked and surveys show demand for US exports remaining strong. But the weaker base heading into the second half of the year suggests that net trade will nonetheless remain a drag on economic growth in the third quarter.
Michael Pearce Senior US Economist
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US Economics Weekly

Labour force exodus shows no sign of reversing

This week brought more news that acute labour shortages and the resulting surge in wages are rapidly feeding through into the most cyclically sensitive components of the consumer price index.

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Retail Sales (Sep.)

The 0.7% m/m rise in retail sales in September suggests goods spending held up a little better than we had anticipated, but real consumption growth still slowed sharply in the third quarter.

15 October 2021

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Deepening labour shortages point to lasting damage

The August Job Openings and Labor Turnover survey released yesterday added to signs that labour shortages are still getting worse at a time when many of the temporary factors that were supposedly holding back labour supply are easing. We’re getting more concerned that much of the drop in labour force participation will prove permanent, which is in turn a reason to expect the recovery in real activity and employment to disappoint over the coming years, while wage and price growth remain elevated.

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US Economics Update

Monetary Indicators Monitor (Jun.)

Although the headline data show bank loans stagnant, that is mostly due to the forgiveness of Paycheck Protection Program loans and mortgage securitisations, with the broader evidence pointing to an acceleration in credit growth.

5 August 2021

US Data Response

ISM Manufacturing Index (Jul.)

The further small decline in the ISM manufacturing index in July probably has more to do with the continued drag from supply constraints than waning demand. The details did at least suggest that supplier delivery times and the accompanying upward pressure on prices may have peaked. But we suspect it will be a long time before supply constraints ease meaningfully.

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US Data Response

Industrial Production (Jun)

The modest 0.4% m/m increase in industrial production in June was due to a weather-related spike in utilities demand and a recovery in mining output, with manufacturing output dragged down by another big semiconductor-related drop in auto production. With shortages set to persist for a while yet, we expect output to rebound only gradually over the remainder of this year.

15 July 2021
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