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Gains in sales & output both muted The 0.3% m/m increase in retail sales included a 1.4% m/m gain in the value of motor vehicle sales, which is very hard to square with the 6.5% m/m decline in light vehicle unit sales already reported by manufacturers. …
15th June 2023
Core inflation still uncomfortably high Headline CPI inflation fell to a more than two-year low of 4.0% in May, thanks to favourable base effects and another sharp drop back in energy prices last month but, with core price inflation still as high as …
13th June 2023
Despite employment strength, unemployment up and wage growth down The bigger-than-expected 339,000 increase in non-farm payroll employment in May will dominate the headlines, but the employment report was not all positive – with a big drop in the …
2nd June 2023
Recession risks remain high The slight decline in the ISM manufacturing index to 46.9 in May, from 47.1, reinforces our view that the jump in manufacturing output in April won’t be sustained. But the bigger news was the renewed plunge in the new orders …
1st June 2023
Resilience of activity likely to fade Solid gains in retail sales and manufacturing output in April indicate that the economy remains resilient to the impact of higher interest rates and tightening lending standards. That said, real consumption growth is …
16th May 2023
Core inflation refusing to budge The 0.4% m/m gains in headline and core consumer prices in April leaves core inflation at 5.5%, broadly unchanged from its level at the start of this year, further illustrating that the previous downward trend has …
10th May 2023
April strength offset by downward revisions to earlier months The 253,000 gain in non-farm payrolls in April suggests that the labour market remains resilient despite the banking sector turmoil and broader signs of an economic slowdown. That said, the …
5th May 2023
Strength of exports and unit labour cost growth unlikely to last A rebound in exports drove a sharp narrowing of the international trade deficit to a four-month low of $64.2bn in March, from $70.6bn in February, but the surveys continue to suggest that …
4th May 2023
Manufacturing outlook weak, but hi-tech revival boosting construction The trivial rebound in the ISM manufacturing index to a still depressed 47.1 in April, from 46.3, contrasts with the more substantial recovery in the alternative S&P Global PMI but …
1st May 2023
Economy starts the year on a weaker footing The disappointing 1.1% annualised rise in first-quarter GDP indicates that the economy had less forward momentum at the start of this year than previously thought. We continue to expect the drag from higher …
27th April 2023
Details consistent with declining equipment investment The 3.2% m/m jump in durable goods orders in March mainly reflects a stronger-than-expected gain in the more volatile commercial aircraft component, with the details suggesting that first-quarter …
26th April 2023
Further evidence of fading economic momentum The 0.5% m/m fall in manufacturing output in March provides more evidence of a loss of economic momentum going into the second quarter. While the return of temperatures to seasonal norms last month appears to …
14th April 2023
Sales saved by online strength Retail sales fell by 1.0% m/m in March, adding to the evidence that the strong start to the year was partly due to the unseasonably mild winter weather. With control group sales only falling by 0.3% m/m last month, …
Core inflation remains elevated despite easing in shelter There were some encouraging signs in the March CPI report, including the first evidence that shelter inflation is slowing, but core prices still increased by 0.4% m/m which, on an annualised basis, …
12th April 2023
Employment and wage growth continue to trend lower The 236,000 gain in non-farm payrolls in March adds to the evidence that the economy’s strong start to the year was partly weather related, with momentum fading again. With the sharp fall in job openings …
7th April 2023
Falling trade volumes add to signs of economic slowdown The sharp declines in both exports and imports in February add to the signs that economic growth is faltering. Although strong gains in January mean that both are still likely to have risen over the …
5th April 2023
Domestic weakness offsetting China reopening boost The slump in the ISM manufacturing index to a new cyclical low of 46.3 in March, from 47.7, indicates that the post zero-Covid recovery in manufacturing activity in China has not benefited US producers …
3rd April 2023
Investment weakening even before banking woes The 1.0% m/m fall in durable goods orders in February indicates that business equipment investment was weak even before the banking turmoil arose. With business confidence likely to have taken a hit in recent …
24th March 2023
Surveys point to renewed weakness soon The February industrial production data were marginally stronger than we had expected, with manufacturing output rising by a further 0.1% m/m following the 1.3% surge in January. But with the regional surveys going …
17th March 2023
January surge mostly sustained The 0.4% m/m fall in retail sales in February only partly reversed the 3.2% surge in January, suggesting that real consumption growth will accelerate to at least 3.5% annualised in the first quarter. But to the extent that …
15th March 2023
Strong inflation data counter financial stability concerns The 0.5% m/m rise in core consumer prices last month adds to the evidence that inflation remains stubbornly high, but the ongoing fallout from the SVB crisis over the coming days is still likely …
14th March 2023
Payrolls strong but rest of report suggests 25/50bp Fed hike debate unresolved The above-consensus 311,000 increase in payroll employment last month confirms that the super-sized 504,000 gain in January wasn’t just a seasonal distortion, but the rest of …
10th March 2023
Strong start to 2023 unlikely to be sustained The widening in the international trade deficit to $68.3bn in January, from $67.2bn, included big rebounds in both imports and exports which, at face value, add to the signs that demand is strengthening at …
8th March 2023
Still firmly in contractionary territory The modest rebound in the ISM manufacturing index to 47.7 in February, from 47.4, leaves it firmly in contractionary territory. That should temper talk of a manufacturing resurgence on the back of improvements in …
1st March 2023
Resilience of core orders unlikely to last The 0.7% m/m rebound in core durable goods orders in January rounds off a month of strong activity releases and suggests business investment will hold up a bit better in the first quarter than we had thought. …
27th February 2023
Further evidence of rebound The 1.0% m/m rebound in manufacturing output in January provides further evidence that the economy began the year on a strong footing. That said, while the survey evidence also appears to be turning a corner, for now it is …
15th February 2023
Surge in sales erases Q1 recession fears The massive 3.0% m/m surge in retail sales in January may have been partly related to the unseasonably mild winter in the Northeast but, alongside the unexpected strength of payroll employment, it nevertheless …
Pace of disinflation slowing The 0.5% m/m increase in consumer prices in January suggests that the downward trend in inflation is slowing. But we still expect the disinflationary process to re-accelerate soon, as easing shortages push core goods prices …
14th February 2023
Deficit rebounds as easing supply shortages boost imports The December trade data show a rebound in both real exports and imports but, with those gains following steep declines in previous months and the surveys pointing to renewed weakness to come, the …
7th February 2023
Robust payrolls not preventing wage growth slowdown The robust 517,000 gain in non-farm payrolls in January means that, despite most leading indicators of recession flashing red, the economy is clearly not as close to recession as we had suspected. …
3rd February 2023
Another recession signal flashing red The further fall in the ISM manufacturing index to 47.4 in January, from 48.4, suggests that the factory sector has yet to benefit from the improvements in manufacturing prospects in Europe and China. In particular, …
1st February 2023
Underlying pace of growth weakens The 2.9% annualised rise in fourth-quarter GDP was a little stronger than we had expected, but the mix of growth was discouraging, and the monthly data suggest the economy lost momentum as the fourth quarter went on. We …
26th January 2023
Manufacturing output slumps to 14-month low The manufacturing sector appears to be in recession and, even if China’s emergence from its Covid restrictions provide some boost later this year, the deterioration in the survey evidence suggests the …
18th January 2023
Consumers buckle under higher rates The 1.1% m/m fall in retail sales in December, which followed a downwardly-revised 1.0% fall in November, adds to the evidence from the surveys that the economy was losing momentum towards the end of last year. …
Another more muted gain in core CPI Core CPI inflation was still an elevated 5.7% in December but, with another more muted 0.3% m/m gain, the three-month annualised rate fell to a 20-month low of 3.1%. Admittedly, the latter is still slightly above the …
12th January 2023
Labour market data boost odds of a soft landing The solid 223,000 gain in non-farm payrolls and drop-back in unemployment to a 50-year low in December will, at face value, do little to ease the Fed’s concerns about resilient core services inflation. …
6th January 2023
Trade hit by domestic and external weakness The sharp narrowing of the trade deficit to $61.5bn in November, from $77.8bn, came as a big fall in exports was offset by an even sharper drop in imports. Net trade still looks to have been a small drag on …
5th January 2023
Index drops into recessionary territory The decline in the ISM manufacturing index to a two-and-a-half year low of 48.4 in December, from 49.0, is another sign that the economy lost more momentum at the tail-end of last year. Nearly all the survey-based …
4th January 2023
Q4 growth looking ok, but economy losing momentum Real consumption is on course for solid growth of 3.5% annualised in the fourth quarter, but the income and spending data show that it stalled in November. The soft durable goods orders data for last month …
23rd December 2022
Consumer resilience starting to fade The 0.6% m/m falls in retail sales and manufacturing output in November suggest that the economy has lost some serious momentum, with the resilience of consumers to much higher interest rates starting to crumble. …
15th December 2022
Stick a fork in it, inflation is done The Fed will still hike its policy rate by 50bp tomorrow and the new projections could show the peak in rates above 5%, but the 0.2% m/m increase in core consumer prices in November provides strong support to our …
13th December 2022
Deficit widens on shift in pharmaceutical trade The trade deficit widened to $78.2bn in October, from $74.1bn, as the weakness in global demand began to weigh on exports, which declined by $1.9bn. At the same time, imports increased by $2.4bn, as a …
6th December 2022
Resilience in payrolls and wages won’t stop Fed from slowing rate hike pace The resilience of the labour market and the resurgence in wage pressures don’t change our view that core price inflation is going to fall more rapidly than the Fed believes, and …
2nd December 2022
Index drops below 50 mark The decline in the ISM manufacturing index to 49.0 in November, the lowest reading since the early stages of the pandemic, from 50.2, leaves it at a level consistent with a stagnation in broader economic growth. The decline in …
1st December 2022
Equipment investment refusing to roll over despite surging rates The solid 1.0% m/m rise in durable goods orders in October indicates that business equipment investment continues to hold up reasonably well in the face of higher borrowing costs, helped by …
23rd November 2022
Consumers refuse to buckle under weight of higher rates The strength of underlying retail sales despite higher borrowing costs is encouraging, but manufacturing is slowly succumbing to the global malaise. The consumer is hanging in there, with retail …
16th November 2022
Goods deflation begins; health insurance flips The better than expected 0.3% m/m increase in core consumer prices in October won’t on its own persuade the Fed to drop its hawkish stance. But we expect this to mark the start of a much longer …
10th November 2022
Mixed employment report won’t alter the Fed’s hawkish bent The October employment report had something for everyone, with continued strong gains on the payroll survey while the household measure showed a sharp fall in employment and a rise in …
4th November 2022
Exports fading; better news on unit labour costs A drop back in exports and small rebound in imports means the trade deficit bounced back to $73.3bn in September, from a downwardly revised $65.7bn. With that weakness in exports likely to last for some …
3rd November 2022
Goods price pressures evaporating as demand weakens The further fall in the ISM manufacturing index to 50.2 in October, from 50.9, illustrates that global economic weakness and the earlier surge in the dollar are catching up with the factory sector. But …
1st November 2022