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GDP rebounds, but underlying demand stagnates The 2.6% annualised rebound in third-quarter GDP looks impressive, but it was entirely due to a 2.8%-point boost from net external trade. Final sales to private domestic purchasers, a better measure of …
27th October 2022
Manufacturing can’t defy global slowdown for much longer The 0.4% m/m gain in manufacturing output in September, together with some modest upward revisions to prior months, suggests that the factory sector is just about holding up despite the …
18th October 2022
Real consumption growth muted as higher rates bite With retail sales unchanged in September there is still little evidence that the boost to purchasing power from the earlier sharp fall in gasoline prices has helped real consumption. Energy prices are …
14th October 2022
Continued hot inflation means 75bp hikes could keep coming The stronger than expected 0.4% rise in consumer prices in September, driven yet again by a stronger increase in core prices, nails on a 75bp rate hike at the November meeting and, in contrast to …
13th October 2022
Labour market conditions cooling only gradually The 263,000 gain in non-farm payrolls in September is another signal that labour market conditions are cooling. But with the unemployment rate dropping back to 3.5% the report is unlikely to significantly …
7th October 2022
Surging exports keeping economy afloat The further sharp decline in the trade deficit to $67.4bn in August, from $70.5bn, means that net exports provided a big boost to third-quarter GDP growth. But the twin drags from the surging dollar and the …
5th October 2022
Manufacturing sector slowing; shortages still easing The sharper than expected fall in the ISM manufacturing index to 50.9 in September, from 52.8, leaves it consistent with GDP growth of just 0.5% annualised. The weakness in activity is helping to ease …
3rd October 2022
Orders data suggest equipment investment holding up, for now The 0.2% m/m fall in durable goods orders in August wasn’t as bad as we expected and suggests that business equipment investment is, for now at least, still holding up in the face of surging …
27th September 2022
Manufacturing weighed down by global malaise Manufacturing output edged up by 0.1% m/m in August, as notable gains in petroleum & coal, machinery and electronics were partly offset by a drop back in motor vehicles and parts. With global manufacturing …
15th September 2022
Consumers reluctant to spend gasoline savings The stagnation in underlying retail sales in August suggests that plunging gasoline prices are not providing any significant boost to real consumption. But that could change over the coming months as …
Strength of core inflation confirms Fed will hike by 75bp The 0.6% m/m increase in core consumer prices in August, double the consensus expectation, confirms that the Fed will hike its policy rate by at least 75bp next week. Nevertheless, that outsized …
13th September 2022
Deficit narrows as consumer goods imports cool off The trade deficit narrowed to a nine-month low of $70.7bn in July, from $80.9bn, driven by a sizeable drop back in consumer goods imports, although almost half that decline was due to lower imports of …
7th September 2022
Labour market conditions normalising The slower pace of payroll gains in August, together with the big rebound in the labour force, and the more modest increase in wages, would seem to favour a smaller 50bp rate hike from the Fed next month , rather than …
2nd September 2022
Rebound in new orders provides some reassurance The stabilisation in the ISM manufacturing index at 52.8 in August, unchanged from July, provides some further reassurance that the economy is not yet sliding into recession. While the details suggest …
1st September 2022
Durables dragged down by slump in defence orders The stagnation in durable goods orders in July was principally due to a 50% m/m slump in defence aircraft orders, which are both volatile and not reflective of the strength of private demand. Excluding …
24th August 2022
Lower gas prices helping to support spending on other items While overall retail sales were unchanged in July, the details were far more encouraging, with a price-related fall in gasoline sales freeing up households to increase spending on other goods . …
17th August 2022
Darkening global backdrop suggests manufacturing strength won’t last The 0.6% m/m rise in industrial production in July was much stronger than we expected and provides another clear sign that the economy is still in expansionary territory. That said, the …
16th August 2022
Headline inflation has peaked, although core will remain elevated Consumer prices were unchanged in July and there's a good chance that prices will fall outright in August. With core consumer prices increasing by a more modest 0.3% m/m last month, which …
10th August 2022
Labour market still hot The unexpected acceleration in non-farm payroll growth in July, together with the further decline in the unemployment rate and the renewed pick-up in wage pressures, suggests the economy is still a long way from recession. That …
5th August 2022
Strength of exports unlikely to last much longer The fall in the trade deficit to an eight-month low of $79.6bn in June, from $84.9bn, leaves net trade well placed to support a rebound in GDP in the third quarter. But with the surveys consistent with …
4th August 2022
Manufacturing downturn set to continue Although the ISM manufacturing index fell again in July, to 52.8 from 53.0, the rate of decline does at least appear to be slowing and, for now, it remains consistent with GDP growth of roughly 1.5% annualised – in …
1st August 2022
Falling GDP not enough to prompt Fed pivot The 0.9% annualised fall in GDP in the second quarter is disappointing but doesn’t mean the economy is in recession. The decline was partly due to a huge drag from inventories, while most other coincident …
28th July 2022
Investment growth slowing despite jump in orders The jump in durable goods orders in June mainly reflected a surge in defence aircraft orders. Private equipment investment growth still looks to have slowed in the second quarter, although the latest trade …
27th July 2022
Further evidence of growth slowdown The decline in industrial production in June, led by a fall in manufacturing output, could reflect weaker demand for goods, but we suspect that it is also due to the zero-covid shutdowns in China, which temporarily …
15th July 2022
Strength of sales almost entirely due to surging prices The 1.0% m/m rise in retail sales in June isn’t as good as it looks, as it mainly reflects the boost to nominal sales values from surging prices. Real consumption appears to have been largely …
Another inflation shocker nails on a 75bp hike this month The stronger than expected 1.3% rise in consumer prices in June, which pushed headline inflation to 9.1%, from 8.6%, nails on another 75bp rate hike at the July FOMC meeting. But with commodity …
13th July 2022
Robust payrolls undermine recession claims The strong 372,000 gain in non-farm payrolls in June appears to make a mockery of claims the economy is heading into, let alone already in, a recession. That may be enough to solidify the case for another 75bp …
8th July 2022
Net trade to save Q2 GDP growth The further narrowing in the trade deficit in May reflects the strength of exports and implies that net trade provided a decent boost to second-quarter GDP growth, which we estimate was close to 1% annualised. But with …
7th July 2022
Further evidence of slowdown rather than collapse The fall in the ISM manufacturing index to a two-year low of 53.0 in June, from 56.1, will probably add to fears over the health of the economy. That said, for now it is still consistent on past form with …
1st July 2022
Business equipment investment growth slowing, not collapsing 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 …
27th June 2022
Further evidence of growth slowdown The muted 0.2% m/m rise in industrial production in May adds to the evidence that the economy is slowing. But there is still little in activity data to suggest a recession is on the horizon, or to dissuade the Fed from …
17th June 2022
Surging prices starting to hit real consumption The 0.3% m/m fall in retail sales in May and downward revisions to previous months’ gains suggest that surging prices might finally be taking their toll on real consumption. But with the latter still on …
15th June 2022
Raging inflation could open door to a 75bp hike The surprise increase in headline inflation to a 40-year high of 8.6% in May, from 8.3%, together with another strong rise in core prices raises the odds that the Fed will need to extend its series of 50bp …
10th June 2022
Net trade a big boost to second quarter GDP The bigger than expected drop back in the trade deficit in April suggests that net trade will be a large boost to second-quarter GDP growth, with the risks to our forecast for growth of 4.8% annualised now …
7th June 2022
Payroll gains remain strong, as wage growth eases The better than anticipated 390,000 gain in non-farm payrolls adds to the signs that the economy is still strong while, amid a rebound in the labour force, wage growth is beginning to moderate. With wage …
3rd June 2022
Easing supply shortages lend support to activity The rise in the ISM manufacturing index to 56.1 in May, from 55.4, was better than we had anticipated and suggests a continued easing of supply shortages is supporting activity. But we expect a slowdown in …
1st June 2022
Business equipment investment growth moderating The modest 0.4% m/m rise in durable goods orders in April suggests that rate-sensitive business equipment investment growth is beginning to slow, with underlying capital goods shipments consistent with a …
25th May 2022
Economy firing on all cylinders 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 …
17th May 2022
Never bet against the US consumer Never bet against the US consumer has always been a good adage to bear in mind throughout my 20-plus years in the markets. Despite the surge in prices weighing on their purchasing power, the US consumer now appears to be …
Inflation still set to fall over the coming months The falls in headline and core inflation in April marks the beginning of a sustained decline, as base effects improve and supply shortages ease, although the 0.6% monthly jump in core prices indicates …
11th May 2022
Labour market conditions remain robust The solid 428,000 gain in non-farm payroll employment in April illustrates that the Fed was right to ignore the misleading contraction in first-quarter GDP, with the economy still on a firm footing. Admittedly, we …
6th May 2022
Jump in imports likely to be partly reversed The surge in the trade deficit to a record high of $109.8bn in March, from $89.8bn, was driven by a huge rise in imports as port congestion cleared. We suspect imports will fall back over the coming months, …
4th May 2022
Global manufacturing slowdown will spread to US soon 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 …
2nd May 2022
Stalling real economy won’t stop the Fed The unexpectedly severe 1.4% annualised decline in first-quarter GDP probably won't stop the Fed from hiking interest rates by 50bp next week, since officials will chalk it up to the temporary impact of Omicron and …
28th April 2022
Equipment investment resilient 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 …
26th April 2022
Output surging as bottlenecks clear The strong 0.9% rise in industrial production in March reflected a sharp rebound in autos production as well as another big increase in mining output. The US will not be immune to the global slowdown in manufacturing …
15th April 2022
Surge in energy prices hits real consumption The 0.5% m/m rise in retail sales in March was flattered by a price-related surge in the nominal value of gasoline sales, with the details suggesting that consumption fell in real terms. The 18% m/m surge in …
14th April 2022
Inflation set to fall sharply over rest of the year The surge in energy prices helped drive headline CPI inflation up to a 40-year high of 8.5% in March but, with base effects set to become much more favourable and signs that monthly gains in core prices …
12th April 2022
GDP growth hit by falling exports Although the nominal trade deficit was unchanged at $89.2bn in February specifically, the recent weakness of real exports suggests that net trade was a substantial drag on first-quarter GDP growth. The stability of the …
5th April 2022
Global manufacturing slowdown will spread to US soon The unexpected decline in the ISM manufacturing index to 57.1 in March, from 58.6, still leaves it at a healthy level and, with other US manufacturing surveys strengthening last month. Nevertheless, the …
1st April 2022