The latest economic news shows that while the US economy remains relatively resilient, the rest of the world economy is vulnerable. Excerpts:
Consumer Spending Stronger Than Expected
U.S. consumer spending rose a sharper-than-expected 0.7 percent in October, showing the economy off to a solid fourth-quarter start despite a step-up in inflation, a government report showed on Wednesday.
[I]ncomes rose 0.6 percent in October, the biggest increase since May and well ahead of September's 0.2 percent increase, the Commerce Department report showed... Adjusted for inflation, personal spending climbed a smaller 0.3 percent, a slowdown from September's 0.5 percent advance... Real disposable income -- what's left after adjusting for inflation and taxes -- rose 0.2 percent as food and energy prices rose sharply.
The department's price index for consumer spending...shot up 0.4 percent, the biggest rise since May. But excluding volatile food and energy prices, the inflation index ticked up just 0.1 percent, holding the year-on-year reading at 1.5 percent...
In a separate report released earlier on Wednesday, the Mortgage Bankers Association said applications for U.S. home mortgages, including loan refinancings, fell last week as mortgage rates edged higher.
Factory Growth Picks Up Speed in November
The Institute for Supply Management said its index of national manufacturing activity climbed to 57.8 from 56.8 in October, surpassing forecasts for a smaller gain to 57.0... The survey's employment measure grew to 57.6 from 54.8... ISM's prices paid gauge dipped to 74.0 from 78.5, while new orders expanded to 61.5 from 58.3.
Business Roundtable Releases December CEO Economic Outlook Survey
Business Roundtable’s December 2004 CEO Economic Outlook Survey shows that America’s leading CEOs expect the U.S. economy to continue to grow at a healthy pace in the first half of 2005, with a slight easing from the strong growth of 2004. The responses led to a CEO Economic Outlook Index of 98.9, the second-highest index level for the survey.
ECB Rates Seen Steady as Euro, Oil Weigh
The European Central Bank is expected to keep interest rates steady at 2 percent on Thursday, with markets looking for any hint that the central bank's worries about growth have heightened.
Euro zone manufacturing output stagnated in November... [T]he strong euro has been eating away at euro zone business confidence. It was blamed for a drop in Germany's key Ifo index in November to its lowest level since September 2003 and for bringing growth in the November Eurozone Manufacturing Purchasing Manager's Index almost to a standstill... [T]he index fell to 50.4 in November from 52.4 in October...
Nov global PMI shows manufacturing growth eased
Growth in the global manufacturing sector fell to its slowest pace in over a year in November, an indicator based on national surveys of manufacturers showed on Wednesday. The indicator, produced by JP Morgan together with research and supply management organisations, fell to 53.2 in November from 53.9 in October, recording its weakest growth since September 2003. The index combines survey data from around 20 countries including the United States, Japan, Germany, France and Britain.
Global Chip Gear Sales Seen Down 5.15 Pct in 2005
Global chip equipment sales are expected to fall 5.15 percent in 2005, an industry group said on Wednesday in a sharp reversal from its July forecast of growth of 23.98 percent. Sales of equipment used to make and test microchips are likely to total $33.49 billion next year, down from an estimate for sales in 2004 of $35.31 billion, up 59.13 percent, Semiconductor Equipment and Materials International (SEMI) said.
Among other things, the SEMI figures show how forecasts can change quite dramatically. Unfortunately, it seems to me that revision risks at the moment are mostly towards the downside.
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