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The growth rate of our broad M3 monetary aggregate slowed slightly to 5.0% y/y in June, reflecting the ongoing impact from the Fed's decision to taper its asset purchases last year. … Monetary Indicators Monitor (Jun …
14th July 2015
The 0.3% m/m decline in retail sales in June is disappointing but, given the strength of sales in earlier months, it still looks like real consumption increased by a relatively healthy 2.7% annualised over the second quarter as a whole. After the …
The decline in the labour participation rate to a near 40-year low of 62.6% in June largely reflects structural factors, such as the aging population, rather than cyclical weakness. … Decline in the participation rate is mostly …
13th July 2015
Fed Chair Janet Yellen's semi-annual testimony to Congress on Wednesday and Thursday this week couldn't have been better timed for those wondering whether Greece's potential exit from the euro would prompt the Fed to postpone its first rate hike until …
10th July 2015
Governor Alejandro Garcia Padilla's comment last week that "the debt is not payable" has raised fears that a Puerto Rico debt crisis could have a bigger impact on US financial markets than the crisis in Greece, but we very much doubt that. … Is Puerto …
7th July 2015
The modest rebound in the monthly trade deficit to $41.9bn in May, from $40.7bn, means that net exports are on track to be a very small drag on overall second-quarter GDP growth, which we still think was roughly 3% annualised. … International Trade …
As things stand now, GDP is on track for a 2.3% increase this year, which would be very similar to the growth rates achieved in 2012, 2013 and 2014. It appears that GDP growth is stuck in a rut. It is fast enough to reduce the output gap, albeit only …
2nd July 2015
The 223,000 increase in payroll employment in June was a bit weaker than we had been expecting, but is offset to some degree by the fall in the unemployment rate, to 5.3% from 5.5%. As such, we still think the Fed will hike interest rates in September. …
The further modest rise in the ISM manufacturing index to 53.5 in June, from 52.8 in May, was exactly in line with our above consensus forecast and confirms that the outlook for industry is improving. At this level the index is consistent with annualised …
1st July 2015
The Fed would, of course, be reluctant to hike rates for the first time since 2006 in the midst of another global financial crisis triggered by Greek exit from the euro. However, we do not expect contagion from developments in Europe to be severe enough …
The further rebound in the Conference Board measure of consumer confidence to within touching distance of the eight-year high seen earlier this year suggests that the surge in real consumption in May will be sustained in the coming months. … Conference …
30th June 2015
With the best will in the world towards the anti-austerians, the bigger fiscal squeeze in 2013 had amuch smaller impact on the economy's performance than many feared, while the more recentfading of the fiscal drag hasn't triggered the expected pick-up in …
29th June 2015
Our econometric model points to a 290,000 gainin non-farm payrolls in May and, as a result, wealso expect the unemployment rate to edge downto 5.4%. … Model points to another big gain in …
25th June 2015
The annual growth rates of broad money and bank loans slowed a little in May, but that is mainly due to base effects. Furthermore, our reconstructed measure of M3 still increased by a relatively robust 5.1% over the past year. … Monetary Indicators …
23rd June 2015
There is now a wide mix of evidence showing that, after a very weak start to the year, the economy is booming again. May is turning out to be a particularly strong month: Existing home sales hit a six-year high, motor vehicle sales hit a nine-year high, …
The 1.8% m/m fall in headline durable goods orders in May was largely due to a 35.3% m/m decline in the notoriously volatile commercial aircraft orders component. … Durable Goods …
Our working assumption is still that the Fed will end up raising the fed funds rate three times this year, taking it to a range of between 0.75% and 1.00% by year-end. But we wouldn't be completely flabbergasted if the Fed only hiked twice. Where we …
19th June 2015
The weak start to the year, which we believe was principally due to the record cold winter in the Northeast, doesn't change our view that the US economy will perform strongly over the next 18 months. We now expect GDP growth of only 2.3% in 2015, but it …
18th June 2015
The 0.4% m/m increase in May's consumer price index was almost entirely due to a 10.4% m/m rebound in gasoline prices. Core prices increased by a more modest 0.1% m/m last month, but the three-month annualised core inflation rate was still as high as …
While retail sales volumes only edged up in May, the underlying picture looks robust. And with pay growth picking up, inflation set to remain below 1% for another six months and job creation still strong, there is no reason to expect growth in retail …
As Fed officials left their interest rate projections for this year unchanged, it appears that the FOMC is still on course for a September lift-off. The 0.63% median of those projections implies that the Fed will raise rates twice this year. But officials …
17th June 2015
The 0.2% m/m decline in industrial production in May reflects the ongoing contraction in the mining sector and the impact of the stronger dollar on manufacturers. … Industrial Production …
15th June 2015
The conventional wisdom is that consumers have remained unusually cautious during this recovery. But between the middle of last year and the middle of this year, consumption appears to have been growing at an average annualised pace of 3.2%. That is …
12th June 2015
The rebound in the University of Michigan's consumer confidence index to 94.6 in June, from 90.7, was impressive given the surge in gasoline prices over the past few weeks. It appears that the US consumer revival is alive and well. … UoM Consumer …
The 1.2% m/m gain in May's retail sales may have been a bit below our own 1.5% forecast, but the underlying details of the report are actually a lot stronger than we were expecting. … Retail Sales …
11th June 2015
With the incoming data now showing a clear pick-up in real economic growth and possible signs of an acceleration in wage growth and core price inflation, we expect the Fed to begin hiking interest rates at the September FOMC meeting. We don't, however, …
10th June 2015
The latest NFIB and JOLT surveys illustrate that the bigger than expected gain in employment in May was no fluke. Labour market conditions are strengthening and wage growth will accelerate further. … NFIB & JOLTs surveys show labour market …
9th June 2015
The news last week that first-quarter productivity slumped while unit labour costs soared should be viewed with some scepticism, since the non-farm business sector figures are distorted by the probable mis -measurement of output. In contrast, the …
5th June 2015
The 280,000 gain in non-farm payrolls in May, which was well above the 225,000 consensus forecast but bang in line with our own call, adds to the evidence that the US economy is regaining momentum after another winter slowdown. This leaves the Fed firmly …
The drop back in the trade deficit to $40.9bn in April, from $50.6bn, confirms that the spike in March was a temporary surge caused by the ending of the West Coast port dispute in February and possibly the timing of the Chinese New Year holiday. … …
3rd June 2015
The modest improvement in the ISM manufacturing index to 52.8 in May, from 51.5, puts it at a level that historically has been consistent with GDP growth of around 2%. Accordingly, even though the stronger dollar is holding back the export-focused factory …
1st June 2015
The evidence of a seasonal quirk in the first-quarter GDP growth figures is pretty overwhelming. The same skewed pattern appears to have repeated itself this year too, with the 0.7% contraction in GDP not matched by GDI, which actually expanded by 1.4%. …
29th May 2015
Our econometric model points to a 280,000 gain in non-farm payrolls in May and we also expect the unemployment rate to edge down to 5.3%. … Labour market appears to be …
28th May 2015
The Fed's preferred PCE measure of core inflation is being depressed by declines in the administered prices set by Congress for Medicare and Medicaid. In contrast, the CPI measure, which covers only households' out-of-pocket health spending, is …
Broad money growth has slowed slightly, with the annual growth rate of our M3 measure falling to a six-month low of 5.6% in April. More importantly, however, the growth rate of bank loans continues to accelerate and hit 8.1% last month. … Monetary …
27th May 2015
We still firmly believe that the weakness of first-quarter GDP was principally due to the unseasonably severe winter, the meltdown in the shale oil industry and possibly some seasonal quirks too. In theory, all of those transitory factors should fade …
April's durable goods figures confirm that, following the earlier disruption caused by the unseasonably cold weather in the Northeast and the West Coast port dispute, the factory sector was getting back on track as spring approached. … Durable Goods …
26th May 2015
This week we expect to learn that, rather than edging up by 0.2% annualised as the first estimate indicated, first-quarter GDP contracted by 0.7%. The principal reason for the revision is that net external trade was a bigger drag than the BEA originally …
22nd May 2015
The 0.3% m/m increase in core consumer prices in April, which pushed the three-month annualised rate of core inflation up to a four-year high of 2.6%, leaves the Fed with less scope to delay raising interest rates. Admittedly, the annual core inflation …
We still believe that the unseasonably cold winter in the Northeast together with some strange seasonal quirks can explain a lot of the weakness in first-quarter GDP growth. It is true that the contraction in the shale oil industry was also a factor, and …
21st May 2015
The introduction of Obamacare doesn't appear to have had any lasting downward impact on medical care consumption. Spending did decline in the first few months of last year, but it has rebounded strongly since then. Furthermore, it doesn't appear that, …
15th May 2015
The weakness in industrial production underlines the negative impact that lower oil prices and the stronger dollar are having on the mining and manufacturing sectors. At the same time, the drop back in consumer confidence suggests that the long-awaited …
The continuing weakness of retail sales in April brings into question our working assumption that the soft patch through the winter months was largely due to the unseasonably cold temperatures in the Northeast. … Retail Sales …
13th May 2015
The slowdown in the annual growth rate of business sales is not a concern since sales are measured in nominal terms. That growth rate has been affected more by the slump in energy prices rather than any genuine deterioration in the real economy. …
8th May 2015
Although non-farm payrolls increased by a relatively healthy 223,000 and the unemployment rate edged down to a seven-year low of 5.4%, April's employment report was otherwise something of a mixed bag. Any possibility of a June rate hike from the Fed is …
The surge in the trade deficit to a massive $51.4bn in March, from $35.9bn, means that the economy contracted slightly in the first quarter. Nevertheless, the enormous 7.7% m/m jump in imports is mainly because, following the resolution of the labour …
5th May 2015
Although it was unchanged at 51.5 in April, the ISM manufacturing index is still at a level consistent with GDP growth of nearly 2% annualised. Given the extent of the dollar's appreciation over the past 12 months, the export-orientated manufacturing …
1st May 2015
We don't think that the unexpectedly weak 126,000 gain in non-farm payrolls in March signals the start of a deterioration in labour market conditions. Other indicators have remained at robust levels and our econometric model points to a 230,000 increase …
30th April 2015
The latest FOMC statement released today suggests that Fed officials still believe economic growth and inflation will rebound. But until they see evidence of such a rebound, which could take another few months, they are in no rush to raise interest rates …
29th April 2015
The economy all but stagnated in the first quarter, as lower energy prices triggered a big drop in mining investment, but did little to boost consumer spending because of the impact of the unseasonably cold winter in the Northeast. … GDP (Q1 1st …
