Tuesday May 31 2016
US Personal Spending Growth at Nearly 7-Year High
BEA | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer spending in the United States rose 1 percent in April from March of 2016, after posting no growth in the previous period and much better than market expectations of a 0.7 percent gain. It is the highest growth since August of 2009 as consumption of nondurable goods rebounded. Meanwhile, personal income increased 0.4 percent, suggesting a robust and accelerating economic recovery.

Consumption in durable goods went up 2.3 percent, rebounding from a 0.1 percent fall in March; spending in nondurables rose 1.4 percent, higher than 0.4 percent in March and services expenditure increased 0.6 percent after stalling in March. 

Personal income increased 0.4 percent, the same as in the previous month and in line with expectations. Wages and salaries increased $38.6 billion in April, compared with an increase of $30.7 billion in March. Private wages and salaries rose $37.2 billion, compared with an increase of $27.6 billion. Government wages and salaries went up $1.4 billion, compared with an increase of $3.1 billion. Supplements to wages and salaries increased $5.9 billion in April, compared with an increase of $5.5 billion in March.

The personal consumption expenditure price index rose 0.3 percent on the month and 1.1 percent on the year (0.1 percent and 0.8 percent respectively in March). Core PCE inflation also accelerated to a monthly rate of 0.2 percent and an annual of 1.6 percent (0.1 percent and 1.6 percent respectively in March).




Friday May 27 2016
US Consumer Sentiment Revised Down in May
University of Michigan | Joana Taborda | joana.taborda@tradingeconomics.com

The final University of Michigan's consumer sentiment for the United States came in at 94.7 in May of 2016, down from 95.8 in the preliminary release but higher than 89 in the previous month. Future expectations decreased while the current conditions index rose to its highest since January 2007.

The gauge of consumer expectations was recorded at 84.9 versus a preliminary reading of 87.5 and a final of 77.6 in the previous month. The barometer of current economic conditions came in at 109.9, higher than a preliminary reading of 108.6 and compared with a final reading of 106.7 in March. 

Americans expect the inflation rate in the next year will be 2.4 percent, lower than a preliminary of 2.5 percent and 2.8 percent in April. Over the next 5 to 10 years, they expect consumer prices to increase 2.5 percent, the same as in the previous month but lower than a preliminary of 2.6 percent.




Friday May 27 2016
US GDP Growth Revised Up to 0.8% in Q1
BEA | Joana Taborda | joana.taborda@tradingeconomics.com

The US economy expanded an annualized 0.8 percent on quarter in the first three months of 2016, better than a 0.5 percent increase initially estimated, according to the second estimate released by the Bureau of Economic Analysis. Consumption continued to boost growth as spending on home building increased more than expected and the drag from net trade and inventories was smaller. In contrast, business investment fell faster than anticipated.

Personal consumption expenditure (PCE) contributed 1.29 percentage points to growth (1.27 percent in the advance estimate) and rose 1.9 percent (1.9 percent in the advance estimate). Spending on durable goods (-1.2 percent from -1.6 percent in the advance estimate) fell less than expected, consumption of nondurable goods (1.3 percent from 1 percent in the advance estimate) rose more whose the one for services increased less than expected (2.6 percent from 2.7 percent). 

Fixed investment subtracted 0.25 percentage points to growth (-0.27 percent in the advance estimate) and shrank 1.5 percent (-1.6 percent in the advance estimate). Nonresidential investment declined faster by 6.2 percent (-5.9 percent in the advance estimate) and investment in intellectual property products fell 0.1 percent (compared to a 1.7 percent growth in the advance estimate) while structures declined less (-8.9 percent from -10.7 percent in the advance estimate) and residential investment increased 17.1 percent, higher than 14.8 percent in the advance estimate. 

Private inventories subtracted 0.2 percentage points from the growth, compared to a 0.33 percentage points decrease earlier estimated. Businesses accumulated $69.6 billion worth of inventory, compared to $60.9 billion earlier reported. 

Meanwhile, exports shrank at a slower 2 percent (-2.6 percent in the advance estimate) while imports contracted 0.2 percent, compared to a 0.2 percent increase earlier reported and bringing the impact from trade to -0.21 percent from -0.34 percentage points earlier reported.

Government spending and investment added 0.2 percentage points to growth, the same as in the advance estimate.





Thursday May 26 2016
US Jobless Claims Drop to 268K
DOL | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The number of Americans filing for unemployment benefits decreased by 10,000 to 268,000 in the week ended May 21st compared to unrevised 278,000 in the previous period. Claims fell for the second time in five weeks, below market expectations of 275,000. It is the 64th consecutive week initial claims are below 300,000, the level associated with a healthy jobs market.

The 4-week moving average was 278,500, an increase of 2,750 from the previous week's unrevised average of 275,750.

The advance seasonally adjusted insured unemployment rate was 1.6 percent for the week ending May 14, unchanged from the previous week's unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending May 14 was 2,163,000, an increase of 10,000 from the previous week's revised level. The previous week's level was revised up 1,000 from 2,152,000 to 2,153,000.

The 4-week moving average was 2,151,250, an increase of 8,500 from the previous week's revised average. The previous week's average was revised up by 250 from 2,142,500 to 2,142,750. 




Thursday May 26 2016
US Durable Goods Orders Up 3.4%
US Census Bureau | Joana Taborda | joana.taborda@tradingeconomics.com

New orders for US manufactured durable goods surged 3.4 percent in April from March of 2016, following an upwardly revised 1.9 percent rise in the previous period and much better than market expectations of a 0.5 percent increase. It is the biggest gain since January, boosted by demand for transportation equipment. Excluding transportation, new orders rose 0.4 percent and without defense orders increased 3.7 percent. In contrast, capital goods orders fell 0.8 percent, down for the third straight month.

Transportation equipment, also up three of the last four months, led the increase, $7.1 billion or 8.9 percent to $87.1 billion.

Shipments of manufactured durable goods in April, up following two consecutive monthly decreases, increased $1.5 billion or 0.6 percent to $232.5 billion. This followed a 0.8 percent March decrease. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $1.0 billion or 1.3 percent to $80.9 billion.

Unfilled orders for manufactured durable goods in April, up three of the last four months, increased $6.3 billion or 0.6 percent to $1,137.0 billion. This followed a virtually unchanged March increase. Transportation equipment, up two consecutive months, led the increase, $6.1 billion or 0.8 percent to $783.1 billion.

Inventories of manufactured durable goods in April, down nine of the last ten months, decreased $0.7 billion or 0.2 percent to $384.4 billion. This followed a 0.2 percent March decrease.

Machinery, down eight of the last nine months, led the decrease, $0.5 billion or 0.7 percent to $66.1 billion.

Nondefense new orders for capital goods in April increased $5.4 billion or 7.8 percent to $73.6 billion. Shipments increased $0.4 billion or 0.6 percent to $71.4 billion. Unfilled orders increased $2.2 billion or 0.3 percent to $707.2 billion. Inventories decreased $0.2 billion or 0.1 percent to $172.4 billion.

Defense new orders for capital goods in April increased $0.5 billion or 3.7 percent to $13.2 billion. Shipments decreased $0.4 billion or 4.1 percent to $9.6 billion. Unfilled orders increased $3.6 billion or 2.6 percent to $140.7 billion. Inventories increased $0.2 billion or 1.2 percent to $20.8 billion.





Tuesday May 24 2016
US New Home Sales Up to 8-Year High
US Census Bureau |Joana Taborda | joana.taborda@tradingeconomics.com

New US single-family home sales jumped 16.6 percent to a seasonally adjusted annual rate of 619,000 in April of 2016, much higher than an upwardly revised 531,000 in the previous month and compared to market expectations of 523,000. It is the highest reading since January of 2008 and the biggest gain since 1992.

Sales in the Northeast surged 52.8 percent to 55,000, those in the west increased 18.8 percent to 152,000 and sales in the South went up 15.8 percent to 352,000, offsetting a 4.8 percent fall in sales in the Midwest (to 60,000).

The median sales price of new houses sold in April increased to $321,100 from $297,900 in March and 9.7 percent higher than a year earlier. The average sales price also went up to $379,800 from $353,900 in the previous month and rose 13.5 percent year-on-year.

The stock of new houses for sale declined 0.4 percent to 243,000. This represents a supply of 4.7 months at the current sales rate, the lowest since February last year.

Year-on-year, new home sales grew 23.8 percent in April.




Monday May 23 2016
US Factory Activity Slows Further to Fresh 2009-Low
Markit | Joana Taborda | joana.taborda@tradingeconomics.com

The Markit Flash US Manufacturing PMI came in at 50.5 in May of 2016, lower than 50.8 in April and below market expectations of 51. Production declined for the first time since September of 2009 and new orders expanded at the slowest pace so far this year.

A renewed fall in production was one key factor weighing on the headline index in May, alongside softer new order growth and further cuts to stocks of inputs. U.S. manufacturers signalled the first reduction in output since September 2009 in May, although the rate of decline was only marginal. A number of monitored firms mentioned that uncertainty around the general economic outlook had caused clients to delay spending decisions, which in turn prompted firms to trim their production schedules. 

Softer client demand was highlighted by a further slowdown in new business growth in May. Furthermore, the latest expansion in new order books was the weakest seen in 2016 so far. Data indicated that reduced foreign client demand had underpinned slower growth in overall new orders. New export sales fell for the second month in a row, though the rate of reduction softened since April.

A general lack of pressure on operating capacity was signalled by the latest survey data, with outstanding work at U.S. manufacturers falling for the fourth successive month in May. The rate of backlog depletion was unchanged from April’s postrecession record and moderate overall. Despite slower growth of new orders, goods producers in the U.S. continued to add to their payroll numbers in May. The rate of employment growth was only slight, however, despite picking up from April’s 34- month low. 

Manufacturing firms continued to adopt relatively cautious inventory policies in the face of an uncertain business outlook and weaker new order growth. Stocks of inputs declined for the sixth month running and at a rate that was only slightly weaker than in April. Meanwhile, inventories of finished items rose marginally in May, following a slight reduction in the previous month. 

Buying activity increased at a marginal pace in the latest survey period, after a modest reduction in April. Although demand for inputs was relatively muted, average supplier performance continued to deteriorate, with lead times lengthening at a modest pace in May. 

Overall input prices rose for the second month running in May, with some companies citing higher costs for raw materials such as metals and oil. Despite quickening since April, the pace of inflation remained moderate overall and slower than the series average. 

Average selling prices set by U.S. manufacturers were broadly unchanged in May, thereby ending a three-month sequence of price discounting. Reports from panellists indicated that greater cost burdens had led some firms to raise their charges in the latest survey period.




Thursday May 19 2016
US Jobless Claims Fall to 278K
DOL | Joana Taborda | joana.taborda@tradingeconomics.com

The number of Americans filing for unemployment benefits decreased by 16,000 to 278,000 in the week ended May 14th compared to a 15-month high of 294,000 in the previous period. Claims fell for the first time in four weeks, slightly higher than market expectations of 275,000. It is the 63rd consecutive week initial claims are below 300,000, the level associated with a healthy jobs market.

The 4-week moving average was 275,750, an increase of 7,500 from the previous week's unrevised average of 268,250.

The advance seasonally adjusted insured unemployment rate was 1.6 percent for the week ending May 7th, unchanged from the previous week.

The advance number for seasonally adjusted insured unemployment during the week ending May 7th was 2,152,000, a decrease of 13,000 from the previous week's revised level. The previous week's level was revised up 4,000 from 2,161,000 to 2,165,000.

The 4-week moving average was 2,142,500, an increase of 4,250 from the previous week's revised average. The previous week's average was revised up by 1,000 from 2,137,250 to 2,138,250. 


Wednesday May 18 2016
Fed Keeps Open Possibility of June Rate Hike
Fed | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Federal Reserve opened up the option of raising short-term interest rates at their next meeting based on how the incoming data and developments shaped their outlook for the labor market and inflation, minutes from April FOMC meeting showed. Policymakers agreed that the risks associated with global developments had diminished and that labor market conditions had improved further even as growth in economic activity had appeared to slow.

Extracts From the Minutes of the Federal Open Market Committee:

In their discussion of the economic situation and the outlook, meeting participants agreed that the information received over the intermeeting period indicated that labor market conditions improved further even as growth in economic activity appeared to have slowed. Growth in household spending had moderated, although households' real income had risen at a solid rate and consumer sentiment remained high. Since the beginning of the year, the housing sector had improved further, but business fixed investment and net exports had been soft. A range of indicators, including strong job gains, pointed to additional strengthening of the labor market. Inflation had continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and falling prices of non-energy imports. Market-based measures of inflation compensation remained low; survey-based measures of longer-run inflation expectations were little changed, on balance, in recent months. Domestic and global financial conditions eased over the intermeeting period, the incoming news on the foreign economic outlook was generally positive, and investor sentiment improved.

Participants generally agreed that the risks to the economic outlook posed by global economic and financial developments had receded over the intermeeting period. The public appeared to have interpreted Federal Reserve communications following the March FOMC meeting as indicating that achieving the Committee's economic objectives would likely require a somewhat more gradual pace of increases in the federal funds rate than anticipated earlier. The shift in policy expectations, along with incoming data showing that economic growth abroad picked up during the first quarter of the year, seemed to contribute to the improved tone in global financial markets. Several FOMC participants judged that the risks to the economic outlook were now roughly balanced. However, many others indicated that they continued to see downside risks to the outlook either because of concerns that the recent slowdown in domestic spending might persist or because of remaining concerns about the global economic and financial outlook. Some participants noted that global financial markets could be sensitive to the upcoming British referendum on membership in the European Union or to unanticipated developments associated with China's management of its exchange rate.




Tuesday May 17 2016
US Industrial Output Growth at 17-Month High
Federal Reserve | Joana Taborda | joana.taborda@tradingeconomics.com

Industrial production in the United States went up 0.7 percent in April from March, rebounding from falls in the previous two months and beating market expectations of a 0.3 percent gain. It is the highest growth rate since November of 2014, led by gains in machinery and car manufacturing and utilities.

Manufacturing output rose 0.3 percent after declining the same amount in March. The production of durables rose 0.6 percent; the largest gains were recorded by machinery and by motor vehicles and parts, with increases of about 2 1/2 percent and 1 1/4 percent, respectively. Only a few durable goods industries posted declines, with the largest, about 1 1/4 percent, for primary metals. The output of nondurable manufacturing was unchanged in April, as gains in the indexes for food, beverage, and tobacco products and for plastics and rubber products offset declines for nearly all of the other industries. The output of other manufacturing (publishing and logging) declined 0.4 percent.

The index for utilities jumped 5.8 percent in April, as the demand for electricity and natural gas returned to a more normal level after being suppressed by warmer-than-usual weather in March. 

In contrast, mining production fell 2.3 percent in April, reflecting substantial cutbacks in oil and natural gas extraction as well as reductions in coal mining and in oil and gas well drilling and servicing. The index for coal mining has fallen nearly 40 percent over the past 12 months.

Capacity utilization for the industrial sector increased 0.5 percentage point in April to 75.4 percent, a rate that is 4.6 percentage points below its long-run (1972–2015) average.