USA Economic Data

The ISM Manufacturing PMI for the United States is likely to come at 55.1 from 54.9 a month back as we can see a steady growth in new orders, employment and inventories which offset the slower growth in production. In April 2017 the orders for the durable goods and other household items rose to touch a new three years high.I am expecting the positive sentiments prevalent in United States to have grown stronger in recent days after the victory ofNew US President Mr. Donald Trump which effectively means the United States ISM Manufacturing PMI will keep on rising for next couple of months.

Chicago Purchasing Managers' Index of the United states is expected to come at 58.5 which will mark the straight 15th month of expansion after showing a below 50 reading in the month of February 2016. The five constituent indices Production (0.25), New Orders (0.35), Order Backlog (0.15), Employment (0.10), and Supplier Deliveries (0.15) are showing good growth in recent months led by increase in New Orders for manufacturing units providing parts heavy industries and automobile sector. This month the Employment index is expected to contribute strongly as the labor market is tight this month.

Pending Home Sales Index is based on sales of existing homes where the contract has been signed but the transaction has not been closed. The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. Recently released data about housing activity has shown rise in home construction. Which is positive for US economy. In last month, Contracts to buy previously owned US homes fell by 0.4 percent year-on-year in November 2016 to their lowest level since February.

Federal Reserve of United states of America is likely to keep the Interest Rate unchanged at 1 to 1¼ percent. In the view of FOMC members the US economy is expected to continue to expand at a moderate pace although uncertainty persists about low inflation and fiscal and government policies. Fed is expecting the ongoing job gains to continue to support the growth of incomes.It is also likely to keep the dot plot unchanged which shows three rate hike in 2018. They wanted to contain balance sheet also so overall there was positive belief in US economy.

Existing home sales report is important as it provides assessment housing market conditions. This report gives record of sales of previously owned houses. As we know recession in US was started because housing prices bubble split. By this report we come to know about consumer spending as income earned from sales of home is used by people for spending on consumption. Which raises demand and growth in cycle. Though these numbers are not counted in GDP but these are important to get insight into US economy. Recently published building permits are lower and also consumer confidence is low in 6 years. So if these numbers grow which is much positive for USD.

The FHFA (Federal Housing Finance Agency) House Price Index which measures the changes in average prices of single-family houses with mortgages guaranteed by Fannie Mae and Freddie Mac is likely to grow by 0.5% (MoM) for the month of April 2017. In recent months house prices have seen a remarkable rise as the election of Mr. Trump as a President of United States of America has generated a widespread sense of optimism in the whole country of united States. Building permits for new houses declined in last month which is likely to cast upward pressure on House price Index as supply reduces.

The New home sales for the June 2017 is expected to come at record 600 K. The figure is a timely gauge of housing market conditions counting home sales when initial housing contracts are signed. Because New Home Sales usually trigger a sequence of consumption, they have significant market impact upon release. In addition to the high expenditure of the new home, buyers are likely to spend more money on furnishing customizing and financing their home. Consequently, growth in the housing market spurs more consumption, generating demand for goods, services and the employees who provide them.

Personal sending in the United States rose 0.2 percent in November from October of 2016 which is lowest since March 2016. Personal consumption rises demand and so spur production and growth. Personal income was flat last month this month expectations are more for the both the indicator.

New orders for US manufactured durable goods fell 0.7% last month as the orders for transportation equipment, Fabricated metal products, Non-defense capital goods were below expectation. This was the first decline of the year. The major contributing sector for decline were machinery which fell 0.7%, capital goods which remain unchanged and civilian aircraft which shrank 9.2%. The orders for defense aircraft rose 7.1 % and those for motor vehicles and parts went up by 0.3 %, the first rise in three months.
The positive contribution from these sectors is expected to continue in May as well.

Mortgage applications in the United States are softening while falling 7.4% last week. This month new housing starts are on decline while the new home sales were nearly flat month on month. There was 2.5 % fall in existing home sales which contributed negatively to total mortgage applications in United States. Refinancing applications for existing home loans fell sharply by 13 % week on week. I think for us to see a new peek up in mortgage applications the effects of the new Trump administration's fiscal policies will have to start showing up.This week I am expecting a weekly growth of 1.26%.

Consumer credit in the United States is expected to rise by $16 billion in May 2017 which will be a twofold rise compared to the consumer credit growth seen in April. In recent months consumer credit has seen a remarkable rise as the election of Mr. Trump as a President of United States of America has generated a widespread sense of optimism in the whole country of united States. Growth in consumer credit spurs more consumption, generating demand for goods, services and the employees who provide them. I think both the revolving credit and non revolving credit will keep rising next few months.

The Richmond Manufacturing Index measures the conditions of the manufacturing sector for the District of Columbia, Maryland, North Carolina, South Carolina, Virginia, and most of West Virginia. It is expected to fall in August to 9 from 14 in the previous month of July. Looking at prospective rise in Shipments and new orders for manufactured goods, the executives in manufacturing sector are more optimistic in this year compared to last year of 2017. Manufacturing Index has broadly stayed in the range of -10 to 20 for last 6 years. Looking at that I expect it to rise to 20 in coming months.

I am expecting Crude Oil to extends slump as API Report is likely to report surge in U.S. crude supplies by 2.5 million barrels while a drop of 3 million barrels may be seen in gasoline supplies, inventories of distillates are likely to be down by 2 million barrels. Part of the draw-down [in gasoline] is seasonal, it's not expected to last much longer as it's being caused by the bump in demand during the summer driving season. I expects the trend of significant crude oil and gasoline to continue because refiners are making good margins and want to run their facilities at high capacity.

US Initial Jobless Claims are expected to fall to 237 thousand in week ending 22nd July 2017 which will be just above the two months low touched in prior week. Recent rise in employment opportunities in both service sector as well as manufacturing industries is helping reduce the initial jobless claims. The service-providing sector is showing a substantial job addition boosted by professional and business; trade, transportation and utilities ; education and health; leisure and hospitality and financial activities. Job gains are modest in manufacturing but contributing positively nonetheless.

US GDP Growth is expected to rise to 2.6 % (YoY) in second quarter of 2017 which will mark a robust improvement from the first quarter of 2017 GDP growth rate of 1.4 % (YoY). The pick up in GDP growth rate is mainly driven by higher consumer spending and rising exports. Optimism about domestic economic conditions is giving the consumers the confidence to spend more as they expect the future income to rise while improvement in world economy is boosting exports as the demand for American products rise. Government spending and inventories are proving drag on otherwise high GDP growth rate.
Translate to English Show original