Yesterday's economic news out of the US was reported by Reuters.
U.S. consumer confidence unexpectedly strengthened in August as an improving job market outweighed rising gasoline prices, the Conference Board said on Tuesday. The private business research group said its consumer confidence index rose in August to 105.6 from a revised 103.6 in July. Analysts had predicted a decline to a 101.5 reading...
A separate report from the Commerce Department said new orders received by U.S. factories in July dropped the most since April 2004, though the decline was not as dramatic as expected. Demand for a wide array of long-lasting manufactured goods plunged...
New orders at U.S. factories fell 1.9 percent in July on a 4.9 percent fall in demand for durable goods, which are items expected to last at least three years. The fall was partially offset by a 1.7 percent increase in orders for non-durable goods. The durable goods figure was unchanged from an initial reading released last week...
... [T]he department said orders were not quite as strong as previously thought in June and rose just 0.9 percent. The department had previously said June orders were up 1.4 percent...
Separately, U.S. chain store sales fell in the final week of August, with back-to-school sales suffering from unusually warm weather, Redbook Research, an independent company, said in another report issued on Tuesday.
August sales to date were down 1 percent compared with the same span in July, while sales at major retailers rose 3.4 percent on a year-over-year basis for the week ended August 27.
The rise in consumer confidence was a surprise, but the Conference Board's survey was conducted before the recent spike in oil prices to nearly US$71 a barrel following Hurricane Katrina's rampage through the Gulf of Mexico.
Yesterday also saw the Federal Reserve release its minutes of the Federal Open Market Committee meeting on 9 August.
William Polley noted that "these minutes paint quite a picture of how the Fed is concerned that the market needs to take note of the fact that upcoming policy moves are going to be dependent on incoming data." Nevertheless, he thinks that the "rate hikes are clearly not over".
Tim Duy thinks so too.
The FOMC ultimately concludes that interest rates will likely have to trend higher, although, as always, they remain data dependent. As I suggested in my last post, I see the data as supportive of further rate hikes. Moreover, I tend to view Katrina as having a net inflationary impact, which adds another round of ammunition for the inflation hawks on the FOMC.
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