Friday 2 March 2007

US consumer, global manufacturing stay resilient

World stock markets remained weak yesterday, but if they are reflecting a weaker global economic outlook, yesterday's data did not provide very much supporting evidence.

US data showed strong personal income and spending growth in January. From Reuters:

Personal income rose 1 percent in January, the biggest gain in a year, while spending rose 0.5 percent, the Commerce Department said.

But that came with higher core inflation.

Core consumer prices, which exclude volatile energy and food costs, rose 0.3 percent in January, outpacing forecasts for a 0.2 percent rise after a 0.1 percent gain in December.

The housing sector remained weak.

The housing sector's weakness continued take its toll on the economy, with construction spending in January down 0.8 percent on the 10th straight monthly decline in residential building.

But manufacturing recovered.

The ISM index of national factory activity rose to 52.3 from 49.3 in January, above economists' median forecast for a slight rise to 50.0.

Manufacturing also looked healthy elsewhere, the manufacturing purchasing managers index edging up to 55.6 in February in the euro zone from 55.5 in January, rising to 55.4 from 53.2 in January in the UK, climbing to 53.0 from 52.0 in January in China, but slipping to 53.0 from 53.4 in January in Japan.

In other data from the UK yesterday, mortgage approvals rose in January but lending slowed, as did retail sales growth.

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