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11 May 2015
How is the US economy performing in Q2? – BBH
FXStreet (Barcelona) - With Q1 painting a soft picture for the US economy, the Brown Brothers Harriman Team, reviews the Q2 data and further shares their forecast for the key data ahead – retail sales, consumption, GDP, manufacturing and industrial output.
Key Quotes
“Last week we learned that after a simply dismal March labor report, April job growth bounced back above 200k. The May employment survey will be done in the week ahead. Weekly initial jobless claims have fallen to new cyclical lows, as has the unemployment rate.”
“The gradual improvement is widespread. The under-employment slipped to 10.8% from 10.9%. It peaked above 17% but remains elevated. Those who have involuntarily taken part-time work fell by 125k to 6.58 mln, which is also a positive trend that needs to continue. The same can be said of the long-term (27 weeks+) unemployed. Those fell 38k to 2.53 mln.”
“The employment report was good but not spectacular. The March JOLTS report should confirm the continued absorption of labor market slack, as job openings rise (February highest since 2001) and quits increase (10% year-over-year).”
“The most important US report in the week ahead, however, is about the consumer, not the worker. The consumption component in Q4 14 rose 4.4%, the fastest increase since 2006. In Q1 15, the pace slowed to 1.9%. If the US economy is strengthening in Q2, it is important to see it in the consumption data. We anticipate consumption to accelerate toward 2.5%.”
“After falling for three months through February, retail sales rose in March by the most in a year. The retail sales likely eked out a small gain in April. We already know that auto sales fell month-over-month. Excluding autos, the retail sales may have increased by 0.5%.”
“The components used for GDP calculations also fell for three months before rising 0.4% in March. The consensus calls for a 0.5% in April. If true, the March and April period offset in full the decline in December-February.”
“Manufacturing output fell over the same period and posted a modest 0.1% increase in March. The consensus expects a 0.2% increase in April. Overall, industrial output likely stabilized after falling 0.6% in March (mostly on utility output and energy sector)”
Key Quotes
“Last week we learned that after a simply dismal March labor report, April job growth bounced back above 200k. The May employment survey will be done in the week ahead. Weekly initial jobless claims have fallen to new cyclical lows, as has the unemployment rate.”
“The gradual improvement is widespread. The under-employment slipped to 10.8% from 10.9%. It peaked above 17% but remains elevated. Those who have involuntarily taken part-time work fell by 125k to 6.58 mln, which is also a positive trend that needs to continue. The same can be said of the long-term (27 weeks+) unemployed. Those fell 38k to 2.53 mln.”
“The employment report was good but not spectacular. The March JOLTS report should confirm the continued absorption of labor market slack, as job openings rise (February highest since 2001) and quits increase (10% year-over-year).”
“The most important US report in the week ahead, however, is about the consumer, not the worker. The consumption component in Q4 14 rose 4.4%, the fastest increase since 2006. In Q1 15, the pace slowed to 1.9%. If the US economy is strengthening in Q2, it is important to see it in the consumption data. We anticipate consumption to accelerate toward 2.5%.”
“After falling for three months through February, retail sales rose in March by the most in a year. The retail sales likely eked out a small gain in April. We already know that auto sales fell month-over-month. Excluding autos, the retail sales may have increased by 0.5%.”
“The components used for GDP calculations also fell for three months before rising 0.4% in March. The consensus calls for a 0.5% in April. If true, the March and April period offset in full the decline in December-February.”
“Manufacturing output fell over the same period and posted a modest 0.1% increase in March. The consensus expects a 0.2% increase in April. Overall, industrial output likely stabilized after falling 0.6% in March (mostly on utility output and energy sector)”