ISM Manufacturing Index (Jun.)

The headline ISM manufacturing index was virtually unchanged at a high level in June, but the far bigger story is the further rise in the prices paid index to 92.1 from 88.0, its highest level since the 1970s. That is consistent on past form with CPI inflation rising above 5% in the coming months.
Michael Pearce Senior US Economist
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US Economics Update

Fed lines up March rate hike

The Fed’s announcement that it will “soon be appropriate” to raise interest rates and the numerous hints dropped by Chair Jerome Powell in the post-meeting press conference all but guarantee that a March rate hike is coming. Meanwhile, the Fed set out a brief outline of how it will run down its balance sheet, but with any decision still “a couple of meetings” away, that process won’t get underway until mid-year.

26 January 2022

US Chart Book

Omicron impact short-lived

The surge in Omicron infections means more people were self-isolating in early-January than at any time since the beginning of the pandemic, although the impact that will have on employment and output remains uncertain. Furthermore, with cases now falling just as quickly as they rose, any effects will be quickly reversed in February. In contrast to earlier waves, the rise in infections hasn’t prompted as big a pullback in services activity, with fears of catching the virus lower than during previous waves. The far bigger factor this time is staff absenteeism, which we think will cause both payroll employment and manufacturing output to decline in January, although the impact should be mostly reversed by the end of the first quarter.

24 January 2022

US Economics Weekly

Omicron reaches plateau, leaving Fed free to hike

We expect the Fed to deliver some heavy hints at next week’s FOMC that it is planning an interest rate hike in March. With the Omicron wave now past its peak nationally, there is little to hold the Fed back, particularly if next week brings news of a further acceleration in wage growth.

21 January 2022

More from Michael Pearce

US Data Response

Durable Goods (May)

The 2.3% m/m rise in durable goods orders last month was driven by another big increase in commercial aircraft orders reflecting the recovery in air travel, with underlying orders weaker than expected. The latter is not too concerning, however, given how far orders are above their pre-pandemic trend, while the continued strength of shipments suggests that business equipment investment is on track for another strong gain in the second quarter.

24 June 2021

US Data Response

Retail Sales (May)

The 1.3% decline in retail sales in May is arguably a lot better than it looks because there were big upward revisions to the April data and spending on food and drink services posted another solid increase last month, with the latter suggesting that the recovery in services consumption is on a solid footing. While real consumption still looks likely to have fallen in May, the offsetting positive news means we are sticking to our forecast that consumption will rise by 10% annualised in the second quarter.

15 June 2021

US Economics Update

Surveys point to surge in wage and price inflation

The surge in job openings and voluntary quits in April add to the survey and anecdotal evidence that labour shortages are becoming increasingly acute.  Those shortages look set to persist for some time and point to both wage growth and price inflation rising markedly in the months ahead.

8 June 2021
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