Saturday 16 August 2008

US economic data show improvement but recovery unlikely soon

Friday's US economic data were quite decent. Bloomberg reports:

Confidence among American consumers gained in August and manufacturing in New York grew the most since January as a slide in gasoline, oil, metals and grain prices eased cost pressures on households and companies.

The Reuters/University of Michigan preliminary index of consumer sentiment rose to 61.7, from 61.2 in July. The Federal Reserve Bank of New York's general economic index climbed to 2.8, from minus 4.9 a month earlier...

Output at factories, mines and utilities rose 0.2 percent last month after a 0.4 percent gain in June, the Fed reported today in Washington. Capacity utilization, which measures the proportion of plants in use, increased to 79.9 percent from 79.8 percent.

However, the outlook remains weak. The Economic Cycle Research Institute's Weekly Leading Index fell to 126.4 in the week to 8 August, its lowest level since July 2003, from 126.9 in the previous week. The annualised growth rate of the index fell to minus 10.8 percent, an 18-week low, from minus 9.6 percent.

"With the WLI plunging over the last five weeks to a new five-year low, the likelihood of a near-term business cycle recovery has dwindled markedly," [Lakshman Achuthan, managing director at ECRI] wrote.

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