The Purchasing Managers Index from China’s National Bureau of Statistics and the China Federation of Logistics and Purchasing showed a jump to 51.0 in August. That’s a 16-month high. In the U.S. the Institute for Supply Management’s manufacturing index climbed to 55.7 in August from 55.4.
Initial claims for unemployment dipped to a weekly 320,000. Economists had been expecting 339,000. In this good news is bad news environment where the Fed has said that it is watching unemployment as a key measure in making a decision about when to reduce its buying of Treasuries and mortgage-backed assets, a lower figure for initial claims was enough to send stocks and bonds down
Yesterday U.S. stocks retreated on better than expected U.S. trade numbers. So why was this bad news as far as U.S. financial markets were concerned? Because this narrower trade deficit could take U.S. GDP growth up to 2.5% in the second quarter and that, the market worries, would be enough to start a Fed taper in September
Recently bad news on the U.S. economy has been good news for U.S. stocks as equity markets have rallied on the belief that disappointing economic growth postponed the date on which the Federal Reserve would start to taper off its program of buying $85 billion a month in Treasuries and mortgage-backed securities. Not today, however. The economy added a very modest 162,000 jobs in July. That was less than the 188,000 jobs added in June
U.S. stocks rose modestly, very modestly, on news this morning that the U.S. economy grew by 1.7% year over year in the second quarter of 2013. That’s up from 1.1% growth in first quarter (revised downward from 1.8%) and above the 1.1% gain expected by economists
Yesterday, the World Bank cut its forecast for growth in the global economy for 2013 to 2.2% from a projection of 2.4% back in January. Today, the International Monetary Fund weighed in with a report that said the U.S. economy will grow by just 1.9% in 2013
The economy generated a net 175,000 new jobs in May. That was above the consensus expectations of 159,000 jobs. And above the 165,000 figure for April. And yet, the official unemployment rate climbed in May to 7.6% from 7.5% in April
The difference between yesterday and today’s numbers on consumer spending trends pretty much sums up the dilemma for the U.S. financial markets. Traders and investors know where we’ve been but, in terms of economic growth, they can’t be sure of where we’re going.
Is faster economic growth in the United States good for stocks because faster growth means more revenue and more profits? Or is more growth bad for stocks because faster growth brings the Federal Reserve closer to tapering off (or even ending) its monthly $85 billion in purchases of Treasuries and mortgage-backed assets?
The headline consumer price index climbed 0.7% in February. That’s the biggest jump in almost four years. Core inflation, the number the Federal Reserve watches, presented a much better picture.
