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Supply problems & labour shortages still the big constraint The details of the small rise in the headline ISM manufacturing index in August to 59.9, from 59.5, suggest demand remains strong and that, while some of the recent price pressures have faded, …
1st September 2021
Equipment investment will probably remain a bright spot in Q3 The 0.1% m/m fall in durable goods orders in July was entirely due to a plunge in the volatile commercial aircraft component. The underlying details suggest that growth in business equipment …
25th August 2021
Economy set for sharp slowdown in third quarter The 1.1% m/m fall in retail sales in July suggests that the hit to real incomes from surging prices, along with growing concerns about the Delta coronavirus variant, is starting to take its toll. The upshot …
17th August 2021
Core inflation unlikely to fall back as quickly as Fed hopes The more modest 0.3% m/m rise in core consumer prices in July indicates that the transitory burst of rising prices linked to reopening is fading and that, after falling to 4.3% from 4.5% in …
11th August 2021
Payrolls acceleration could bring forward taper decision The stronger 943,000 rise in non-farm payrolls in July and upward revision to previous months’ gains indicates that employment growth has shifted into a higher gear and that the drag on hiring from …
6th August 2021
Net trade will remain a drag on GDP growth in the third quarter 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 …
5th August 2021
Supply problems no longer getting any worse 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 …
2nd August 2021
Economy surpasses pre-pandemic size, but recovery slowing The relatively disappointing 6.5% annualised gain in second-quarter GDP, which was well below the consensus at 8.5%, included unexpected declines in government spending and residential investment, …
29th July 2021
Equipment investment growth set to remain above trend The June durable goods data were a little weaker than we had expected, but the further rise in underlying orders suggests that business equipment investment growth is slowing only gradually. The 0.8% …
27th July 2021
Surge in prices masks weakness in real sales The 0.6% m/m gain in retail sales in June was a little stronger than we were expecting, but upward revisions to the decline in May take the gloss off that somewhat and, besides, with consumer prices rising by …
16th July 2021
Shortages still constraining output 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 …
15th July 2021
Inflation scare far from over The 0.9% m/m surge in both headline and core consumer prices in June was much stronger than we expected and illustrates that temporary supply bottlenecks stemming from the pandemic are still putting significant upward …
13th July 2021
Payroll growth accelerates, but drag from shortages could persist The stronger 850,000 rise in non-farm payrolls in June may be a sign that some of the temporary labour shortages holding back the employment recovery are starting to ease. But with the …
2nd July 2021
Shortages still pushing prices higher 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 …
1st July 2021
Business equipment investment still expanding rapidly 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 …
24th June 2021
Manufacturing recovery remains unspectacular The 0.8% m/m rise in industrial production in May, driven by a 0.9% gain in manufacturing output, suggests that some of the shortages holding back production in recent months could have eased. But manufacturing …
15th June 2021
Fading stimulus boost partly offset by reopening spending on services 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 …
Surging inflation starting to look a little less transitory The further jump in core CPI inflation to a 28-year high of 3.8% in May, from 3.0%, was again driven by the same handful of categories most directly affect by the lifting of virus restrictions. …
10th June 2021
Net trade switching from a drag to a small boost The sharp drop in the trade deficit, to $68.9bn in April from $75.0bn a month earlier, largely reflects cooling demand for consumer goods now the boost from fiscal stimulus is fading and demand is switching …
8th June 2021
Supply shortages holding back employment recovery The 559,000 gain in non-farm payrolls in May was at least an improvement on the 278,000 gain in April but, with the level of employment still 7.6 million below its pre-pandemic peak, it would take more …
4th June 2021
Labour shortages emerging as key restraint While the headline ISM manufacturing index edged up to 61.2 in May, from 60.7, the main takeaway from the release was that shortages of workers, and not just raw materials, now appear to be playing a key role in …
1st June 2021
Orders held back by shortages in motor vehicle sector The 1.3% m/m decline in durable goods orders in April partly reflected the impact of semiconductor shortages in the automobile sector, with motor vehicle orders falling by 6.2% m/m last month. …
27th May 2021
Supply constraints beginning to weigh on production Manufacturing output increased by a modest 0.4% m/m in April but was held back by a 4.3% m/m drop back in motor vehicle production, as the global shortage of semiconductors really began to bite. Imports …
14th May 2021
Sales remain elevated, but recovery in services losing momentum The unchanged reading for retail sales in April is slightly stronger than it looks given that it follows an upwardly revised 10.7% m/m surge in March, and it suggests that the boost from the …
Reopening & supply shortages trigger price surge, but Fed won’t react The 0.9% surge in core prices last month, the biggest monthly gain since April 1982, was concentrated in sectors that are reopening and/or facing intense supply shortages, which should …
12th May 2021
Payroll gains to reaccelerate in coming months The more muted 266,000 increase in non-farm payrolls last month is a clear disappointment but, with much of the high-frequency data – including jobless claims – still improving rapidly, we doubt it signals …
7th May 2021
Exports and imports to continue rising strongly Although both exports and imports rebounded strongly in March, the former are still 5% below pre-pandemic levels whereas the latter are about 8% higher. As virus restrictions in other advanced economies are …
4th May 2021
Shortages putting massive upward pressure on prices The drop back in the ISM manufacturing index, to 60.7 in April from 64.7, appears to reflect intense and widespread supply constraints rather than a moderation in demand, a view which is underlined by …
3rd May 2021
Boosted by stimulus and reopening, GDP almost back to pre-pandemic peak Buoyed by the two rounds of stimulus cheques sent out in the first three months of the year, first-quarter GDP growth accelerated to 6.4% annualised, driven by a massive 10.7% surge …
29th April 2021
Surveys point to continued strength The strong rebound in underlying durable goods orders in March, which partly reflects the unwinding of earlier weather-related disruption, indicates that business equipment investment has continued to expand at a rapid …
26th April 2021
Supply constraints still weighing on production The relatively modest 1.4% m/m rebound in industrial production in March, which was driven by a 2.7% rise in manufacturing output, was weaker than we had expected and illustrates that global supply shortages …
15th April 2021
Return to normalcy and stimulus deliver big boost to sales The near-10% surge in retail sales in March reflects a small fraction of the windfall from the $1,400 stimulus cheques, which were largely saved. At the same time, loosening restrictions are …
Inflationary pressures to remain strong The outsized 0.6% rise in consumer prices in March, driven in part by a 0.3% rise in core CPI, is the clearest indication so far that the signs of mounting inflation evident in business surveys and producer prices …
13th April 2021
Weather disruption will unwind in March The widening in the trade deficit to $71.1bn in February, from $67.8bn, came as trade in both directions was hit by the severe winter weather. Import growth is on course to outpace exports again in the first quarter …
7th April 2021
Big jobs rebound as restrictions lifted and weather distortion unwinds The better than expected 916,000 rebound in non-farm payrolls in March still leaves employment 8.4 million below its pre-pandemic peak from just over a year ago but, with the …
2nd April 2021
Demand continuing to outstrip supply The rise in the ISM manufacturing index to 64.7 in March, the highest level since 1983, echoes the message from the other surveys that demand is surging. But the details suggest that supply is struggling to keep up, …
1st April 2021
Weather disruption will be reversed in March The fall in durable goods orders in February was mainly due to the disruption caused by the severe winter storms, which we already know weighed heavily on manufacturing output last month. The latest surveys …
24th March 2021
Weather wreaks havoc The 2.2% drop in industrial production in February was largely a result of the severe storms that battered the country in the second half of the month and should be mostly reversed in March. But there were also signs that global …
16th March 2021
January surge only partly reversed The 3.0% m/m fall in retail sales in February reflects the fading of the boost from the $900bn fiscal stimulus and disruption caused by the severe winter weather. Regardless, sales remain more than 4% higher than they …
Weakness in core inflation unlikely to last much longer The rise in CPI inflation to 1.7% in February, from 1.4%, was largely due to higher energy prices, with core inflation still subdued. But base effects will push core inflation above 2% by April and …
10th March 2021
Employment surges as COVID-related restrictions lifted The 379,000 increase in non-farm payrolls in February reflects the lifting of coronavirus containment measures (with a helping hand from the $600 stimulus cheques), with the reopening of restaurants …
5th March 2021
Supply shortages putting upward pressure on prices The further increase in the ISM manufacturing index last month to 60.8, from 58.7, highlights that the recovery in the sector remains red-hot, with the jump in the prices paid component suggesting that …
1st March 2021
Equipment investment growth still unusually strong The stronger-than-expected rise in durable goods orders in January lifted them decisively above their pre-pandemic level, which is even more impressive given the still-subdued level of aircraft orders. …
25th February 2021
Manufacturing output closing in on pre-pandemic level The stronger-than-expected 0.9% m/m rise in industrial production in January, driven by a 1% rise in manufacturing output, means that production is still lagging behind the recovery in goods …
17th February 2021
Fiscal stimulus turbocharges recovery The 5.3% m/m surge in retail sales in January underlines how quickly reopenings and the $600 stimulus cheques have fed through to stronger spending. The faster than expected fiscal boost means we now forecast first- …
Inflation unlikely to remain so subdued for long The fall in core CPI inflation to 1.4% in January, from 1.6%, illustrates that price pressures remain weak, but base effects will drive both core and headline inflation back above 2% over the coming months …
10th February 2021
Labour market recovery likely to regain momentum soon The muted 49,000 increase in non-farm payrolls in January illustrates that the recent wave of COVID-19 cases is still weighing on the economy. But with infections now dropping back sharply and the …
5th February 2021
Strong recovery to continue The fall in the ISM manufacturing index to 58.7 in January was a little weaker than we had expected, but it remains close to the three-year high of 60.5 reached in December and at a level consistent with manufacturing output …
1st February 2021
Growth temporarily dragged down by coronavirus resurgence The more modest 4.0% annualised gain in fourth-quarter GDP was mainly due to some temporary weakness in consumption, which was dragged down by the resurgence in coronavirus infections. With …
28th January 2021
Business equipment investment already back above pre-pandemic levels The weaker 0.2% gain in headline durable goods orders in December was mainly due to ongoing problems among aircraft manufacturers and a drop off in defence orders. The bigger story is …
27th January 2021