Monday, 24 December 2012

US economy maintains expansion

Recent data indicate that the United States economy has continued to grow in the fourth quarter.

Purchasing managers' surveys in the fourth quarter have been giving a mixed picture of the US economy.

The Institute for Supply Management's manufacturing PMI fell to 49.5 in November, the lowest since July 2009, from 51.7 in October. The fall below 50 indicated contraction in US manufacturing activity.

However, the ISM's non-manufacturing index rose to 54.7 in November from 54.2 in October, indicating continued growth in the services sector.

Furthermore, contradicting the ISM data, Markit's purchasing managers' survey showed that its US manufacturing PMI rose to 52.8 in November from 51.0 in October, indicating an acceleration in manufacturing activity.

Markit's flash estimate of the manufacturing PMI for December showed another jump to 54.2 this month.

A report from the Federal Reserve Bank of Chicago last week suggests that growth has indeed accelerated recently. Its national activity Index increased to +0.10 in November from -0.64 in October, pushing the three-month moving average to -0.20 in November from -0.59 in October.

The value of the three-month average in October had been the lowest since November 2009. It was also close to -0.70, the value at which the Chicago Fed says indicates an increased likelihood of a recession.

November's increase takes the average away from that value and suggests that the economy is probably continuing to expand.

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