Friday, 22 September 2006

Indicators point to weaker US economy

It is not looking good for the US economy. Reuters reports:

In the regional factory report, the Philadelphia Federal Reserve Bank said its business activity index tumbled to -0.4 in September from 18.5 in August, far below Wall Street economists' consensus forecast for a reading of 14.8. It was the first time the index had fallen below zero since April 2003. When the index turns negative, it means manufacturing is declining...

First-time claims for state unemployment insurance benefits rose to a seasonally adjusted 318,000 last week from an upwardly revised 311,000 in the prior week, the Labor Department said.

Separately, the New York-based Conference Board said its index of leading economic indicators fell 0.2 percent to 137.6 in August -- the lowest since October 2005 -- after a downwardly revised 0.2 percent fall in July. It was the fourth decline in the past five months.

Another report also helped fill out a picture of a slowdown. The Chicago Federal Reserve Bank said its gauge of national economic activity fell to -0.18 in August from an upwardly revised -0.07 in July, weighed down by weaker production and employment indicators.

It is enough for Nouriel Roubini to increase his recession probability "to a figure higher than 70%".

But at least manufacturing is showing an improving trend in the UK, according to the CBI.

Manufacturing demand has continued to improve with order books at their strongest in 21 months, according to the CBI’s latest monthly industrial trends survey published today (Thursday).

Increased export orders have helped drive this improved demand, leading to stronger expectations for output over the coming months.

The balance of manufacturers reporting 'below normal' orders was five per cent. Although negative, this is an improvement on August’s minus eight per cent and the strongest since December 2004 (-4%).

Yesterday also saw some trade data being reported.

AFX/Forbes has the report on the euro zone.

The current account was 4.8 bln eur in deficit in July in seasonally adjusted terms, the European Central Bank said. This compares with a revised June surplus of 5.2 bln eur.

Earlier, Japan had reported a higher trade surplus for August. From Reuters:

The trade surplus widened 95.5 percent to 200.5 billion yen ($1.71 billion) as exports to the United States grew 19.3 percent and sales to China expanded 20.0 percent, government data showed...

Exports rose 17.7 percent from a year earlier to mark the 33rd straight month of increase. Imports were up 16.1 percent to rise for the 30th consecutive month, as high oil prices inflated the value of Japan's import bill.

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