Friday August 28 2015
US Consumer Sentiment at 3-Month Low
University of Michigan | Joana Taborda | joana.taborda@tradingeconomics.com

The University of Michigan's final reading on the overall index of consumer sentiment came in at 91.9 in August, lower than a preliminary reading of 92.9 and a final 93.1 in July.

The barometer of current economic conditions decreased to 105.1 from a preliminary 107.1 and a July final of 107.2.

The gauge of consumer expectations declined further to 83.4 from a preliminary 83.8 and a final 84.1 in the previous month. It is the lowest figure since November.

Americans expect the inflation rate in the next year to be 2.8 percent, unchanged from the preliminary and the previous reading. Over the next 5 to 10 years, they expect consumer prices to rise 2.7 percent, compared with a preliminary reading of 2.7 percent and a final figure of 2.8 percent in July.




Friday August 28 2015
US Personal Spending Climbs 0.3%
U.S. Bureau of Economic Analysis | Joana Taborda | joana.taborda@tradingeconomics.com

Personal consumption in the US increased 0.3 percent in July of 2015, the same as an upwardly revised 0.3 percent rise in June, but below market expectations. Income rose 0.4 percent for the fourth straight month.

Consumer spending which accounts for more than two-thirds of U.S. GDP was previously reported to have advanced 0.2 percent in June.

Personal income increased $67.1 billion, or 0.4 percent, and disposable personal income (DPI) increased $61.5 billion, or 0.5 percent, in July. In June, personal income increased $59.4 billion, or 0.4 percent and DPI increased $52.4 billion, or 0.4 percent.

Wages and salaries increased by $35.8 billion or 0.5 percent in July, compared with a rise of $14.3 billion in June. It is the biggest rise since November. Private wages and salaries increased $32.7 billion, compared with an increase of $11.0 billion.  Government wages and salaries increased $3.1 billion, compared with an increase of $3.3 billion.

The price index for consumer spending increased 0.1 percent in July, compared with an increase of 0.2 percent in June. Excluding food and energy, the index increased 0.1 percent in July, the same increase as in June.




Thursday August 27 2015
US GDP Growth Revised Up to 3.7%
US Bureau of Economic Analysis | Joana Taborda | joana.taborda@tradingeconomics.com

The US economy expanded an annualized 3.7 percent on quarter in the three months to June, according to the second estimate released by the Bureau of Economic Analysis. Figures came better than a 2.3 percent gain initially reported and beat market expectations due to higher business spending and quicker build up of inventories.

Nonresidential fixed asset investment rose 3.2 percent, compared to 0.6 percent drop in advance estimate. Investment in nonresidential structures grew 3.1 percent compared to an advance 1.6 percent drop and equipment investment fell less than anticipated by 0.4 percent (-4.1 percent in the advance estimate). Investment in intellectual property products increased 8.6 percent, compared to an advance estimate of 5.5 percent and residential fixed investment went up 7.8 percent, higher than a 6.6 percent gain in the advance estimate. 

The accumulation of inventories was also revised upwards to $121.1 billion from $110.0 billion, thus contributing 0.22 percent to growth instead of subtracting 0.08 percentage point as initially reported. 

Personal consumption expenditure increased 3.1 percent compared to a 2.9 percent gain in the advance estimate while federal consumption and investment posted no growth, compared to a 1.1 percent drop in the advance estimate. 

Exports of goods and services went up 5.2 percent, slightly below a 5.3 percent gain in the advance estimate.  Imports rose 2.8 percent compared to 3.5 percent gain initially reported. As a result net exports contributed 0.23 percentage point to the growth.




Thursday August 27 2015
US Jobless Claims Fall More Than Expected
DOL | joana.ferreira@tradingeconomics.com

The number of Americans filling for unemployment benefits was 271,000 in the week ended August 22nd, a decrease of 6,000 from the previous week's unrevised level of 277,000. Initial claims declined for the first time in five weeks, beating market expectations of 274,000.

The 4-week moving average was 272,500, an increase of 1,000 from the previous week's unrevised average of 271,500. 

The advance seasonally adjusted insured unemployment rate was 1.7 percent for the week ending August 15, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending August 15 was 2,269,000, an increase of 13,000 from the previous week's revised level. The previous week's level was revised up 2,000 from 2,254,000 to 2,256,000. The 4-week moving average was 2,265,250, a decrease of 250 from the previous week's revised average. The previous week's average was revised up by 500 from 2,265,000 to 2,265,500. 




Wednesday August 26 2015
Durable Goods Beat Forecasts in July
US Census Bureau | Joana Taborda | joana.taborda@tradingeconomics.com

New orders for US manufactured goods rose for the second straight month by 2 percent in July, slowing from an upwardly revised 4.1 percent gain in the previous month but exceeding market expectations of a drop.

Excluding transportation, orders rose 0.6 percent and excluding defense, orders increased 1 percent, also above expectations. Transportation equipment led the increase, up $3.8 billion or 4.7 percent to $83.2 billion.

Shipments of manufactured durable goods in July, up two consecutive months, increased $2.3 billion or 1.0 percent to $243.2 billion. This followed a 0.9 percent June increase. Transportation equipment, also up two consecutive months, led the increase, $1.9 billion or 2.5 percent to $80.3 billion.

Unfilled orders for manufactured durable goods in July, up two consecutive months, increased $2.3 billion or 0.2 percent to $1197.5 billion. This followed a virtually unchanged June increase. Transportation equipment, also up two consecutive months, drove the increase, $2.9 billion or 0.4 percent to $802.6 billion.

Inventories of manufactured durable goods in July, down two of the last three months, decreased $0.1 billion or virtually unchanged to $402.1 billion. This followed a 0.4 percent June increase. Primary metals, down six consecutive months, drove the decrease, $0.2 billion or 0.5 percent to $37.1 billion.

Nondefense new orders for capital goods in July increased $0.9 billion or 1.1 percent to $82.3 billion. Shipments increased $0.1 billion or 0.1 percent to $79.3 billion. Unfilled orders increased $3.1 billion or 0.4 percent to $762.2 billion. Inventories increased $0.2 billion or 0.1 percent to $177.3 billion. 

Defense new orders for capital goods in July increased $2.0 billion or 22.3 percent to $11.0 billion. Shipments increased $0.2 billion or 1.5 percent to $10.6 billion. Unfilled orders increased $0.5 billion or 0.3 percent to $149.8 billion. Inventories increased $0.2 billion or 1.0 percent to $23.0 billion.




Tuesday August 25 2015
US New Home Sales Rebound
U.S. Census Bureau | Joana Taborda | joana.taborda@tradingeconomics.com

Sales of new single-family houses in the US rose 5.4 percent to a seasonally adjusted annual rate of 507,000 units in July, recovering from fall in June.

Figures for June were revised downwards to show new home sales fell at a faster 7.7 percent to 481 thousand from 482 thousand previously reported.

Sales in the Northeast went up for the third straight month and recorded the highest increase (23.1 percent), followed by the West (6.7 percent) and the South (5.8 percent) while sales in the Midwest shrank 6.9 percent. 

The median sales price of new houses sold in July 2015 was $285,900; the average sales price was $361,600. The seasonally adjusted estimate of new houses for sale at the end of July was 218,000. This represents a supply of 5.2 months at the current sales rate (5.4 in May).




Friday August 21 2015
US Factory Activity at 2-Year Low
Markit | Joana Taborda | joana.taborda@tradingeconomics.com

The Flash Markit Manufacturing PMI in the US unexpectedly dropped to 52.9 in August from a final reading of 53.8 in July. It is the lowest figure since October of 2013 as output, new orders and employment all grew at a slower pace.

The main factor weighing on the headline index was a slowdown in manufacturing output growth from the three-month high recorded during July. Moreover, the latest rise in production volumes was the weakest since the weather-related slowdown recorded in January 2014. Some survey respondents cited a cyclical slowdown in new business growth, as well as heightened uncertainty regarding the demand outlook in August. 

Latest data indicated a solid expansion of overall new order volumes received by manufacturers, but the rate of growth moderated slightly since July. Subdued export sales remained a drag on new business intakes in August. Reflecting this, new work from abroad decreased for the fourth time in the past five months, with a number of firms attributing the decrease to competitive pressures related to the stronger exchange rate. There were also reports that weak capital spending among energy sector clients continued to weigh on some manufacturers’ order volumes. 

Softer rates of output and new business growth contributed to greater caution regarding staff hiring in August. The latest survey pointed to a slowdown in job creation to its least marked since July 2014. Meanwhile, backlogs of work increased only slightly, and at the slowest pace for three months. 

Growth of input buying picked up in August, but remained close to the 18-month low recorded in July amid reports from survey respondents citing cautious inventory policies. Moreover, stocks of finished goods fell for the first time in 2015 so far. Although only marginal, the rate of decline in postproduction inventories was the greatest for just over a year. 

August data pointed to broadly similar rates of input price and output charge inflation as those recorded during the previous month. Higher average cost burdens have now been recorded for four months in a row, but the rate of inflation remained well below the long-run survey average in August. Moreover, the latest increase in factory gate charges was only slight, with survey respondents linking this to subdued cost pressures, especially in terms of raw material prices.




Thursday August 20 2015
Jobless Claims Slightly Up in Latest Week
DOL | Joana Taborda | joana.taborda@tradingeconomics.com

The number of Americans filing for unemployment benefits was 277,000 in the week ended August 15th, an increase of 4,000 from the previous week. Initial claims rose for the fourth straight week, above market expectations.

The previous week's level was revised down by 1,000 from 274,000 to 273,000.

The 4-week moving average was 271,500, an increase of 5,500 from the previous week's revised 266,000 (from 266,250). 

The number of people still receiving benefits after an initial week of aid decreased by 24,000 to 2,254,000. The previous week's level was revised up 5,000 from 2,273,000 to 2,278,000.

The advance seasonally adjusted insured unemployment rate was 1.7 percent for the week ending August 8, unchanged from the previous week's unrevised rate. 

The 4-week moving average was 2,265,000, an increase of 9,500 from the previous week's revised average. The previous week's average was revised up by 1,250 from 2,254,250 to 2,255,500.


Wednesday August 19 2015
Fed on Course to Raise Rates Soon
Fed | Joana Taborda | joana.taborda@tradingeconomics.com

Federal Reserve policymakers confirmed that conditions for the first rate hike had not yet been met but are approaching, as the labour market improves while inflation remains well below target, minutes of the meeting held last month showed.

Extracts From the Minutes of the Federal Open Market Committee:

In their discussion of the foreign economic outlook, participants generally viewed the risks from the fiscal and financial problems in Greece as having diminished somewhat, although it was observed that Greece still faced many challenges and that Greek economic progress was likely to be limited over the near term. While the recent Chinese stock market decline seemed to have had limited implications to date for the growth outlook in China, several participants noted that a material slowdown in Chinese economic activity could pose risks to the U.S. economic outlook. Some participants also discussed the risk that a possible divergence in interest rates in the United States and abroad might lead to further appreciation of the dollar, extending the downward pressure on commodity prices and the weakness in net exports.

During their discussion of economic conditions and monetary policy, participants mentioned a number of considerations associated with the timing and pace of policy normalization. Most judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point. Participants observed that the labor market had improved notably since early this year, but many saw scope for some further improvement. Many participants indicated that their outlook for sustained economic growth and further improvement in labor markets was key in supporting their expectation that inflation would move up to the Committee's 2 percent objective, and that they would be looking for evidence that the economic outlook was evolving as they anticipated. However, some participants expressed the view that the incoming information had not yet provided grounds for reasonable confidence that inflation would move back to 2 percent over the medium term and that the inflation outlook thus might not soon meet one of the conditions established by the Committee for initiating a firming of policy. Several of these participants cited evidence that the response of inflation to the elimination of resource slack might be attenuated and expressed concern about risks of further downward pressure on inflation from international developments. Another concern related to the risk of premature policy tightening was the limited ability of monetary policy to offset downside shocks to inflation and economic activity when the federal funds rate was near its effective lower bound.

In their discussion of the appropriate path for the federal funds rate and associated communications at and after the time of the first increase in the target range, participants expressed support for emphasizing that the course of policy would remain conditional on the Committee's assessment of economic developments and the outlook relative to its objectives. It was also noted that the Committee's communications around the time of the first rate increase should emphasize that the expected path for policy, not the initial increase, would be the most important determinant of financial conditions and should acknowledge that policy would continue to be accommodative to support progress toward the Committee's dual objectives

The Committee concluded that, although it had seen further progress, the economic conditions warranting an increase in the target range for the federal funds rate had not yet been met. Members generally agreed that additional information on the outlook would be necessary before deciding to implement an increase in the target range. One member, however, indicated a readiness to take that step at this meeting but was willing to wait for additional data to confirm a judgment to raise the target range.




Wednesday August 19 2015
US Inflation Rate Up to 0.2%
BLS | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in the US increased 0.2 percent year-on-year in July of 2015, following a 0.1 percent rise in June. It is the highest inflation rate so far this year, pushed by a rise in shelter cost.

The highest upward pressure came from prices of services less energy (up 2.6 percent from 2.5 percent in June), namely shelter (up 3.1 percent from 3 percent in June), medical care (up 2.3 percent, the same as in June) and transportation services (up 2.1 percent from 1.7 percent in June). Food cost increased at a slower 1.6 percent (1.8 percent in June) while energy prices fell 14.8 percent, following a 15 percent drop in June. 

Core inflation rate which excludes food and energy was 1.8 percent, the same as in June.

On a monthly basis, consumer prices rose 0.1 percent, slowing from a 0.3 percent increase in June and below market expectations. The indexes for food, energy, and all items less food and energy all rose slightly in July. The food index rose 0.2 percent as all six major grocery store food group indexes increased. The energy index rose 0.1 percent as an increase in the gasoline index more than offset declines in other energy component indexes.

Core consumer prices also rose 0.1 percent in July. A 0.4 percent advance in the shelter index was the main contributor to the increase, though the indexes for medical care and apparel also rose. In contrast, the index for airline fares fell sharply, and the indexes for used cars and trucks, household furnishings and operations, and new vehicles all declined.