U.S. Economy Continues to Gain Momentum


After a meager growth in the last quarter of 2012, the United States economy seems to be gaining ground. Recent data updates point to the improvement in the labor market, consumption, manufacturing and housing.

Indeed, in February, the pace of growth in the manufacturing sector picked up to its fastest rate in over a year and a half as new orders continued to accelerate. As a result, industrial production rebounded after a weak report in January. More importantly, last month, total nonfarm payroll employment increased by 236,000 and the unemployment rate declined to 7.7 percent, its lowest since late 2008. In addition, the housing recovery is gaining traction. In February,  housing starts rose 0.8 percent  yoy, permits for future construction jumped 4.6 percent, the quickest since June 2008 and home resales hit a three-year high. Also, on March 20th, Fed officials reinforced their plan to keep short-term interest rates at very low levels at least until unemployment falls to 6.5 percent. To make things even better, in February, retail sales rose a solid 1.1 percent from the previous month despite higher taxes and the government spending cuts. Yet, the automatic spending cuts, making the government agencies to reduce their budgets by $85bn between March 2nd and October 1st, are likely to drug the consumption down. So far, The Conference Board's consumer confidence index fell to 59.7 in March from an downwardly revised 68.0 in February.


In the fourth quarter of 2012, GDP growth was revised up to 0.4 percent as big gain in business investment and higher exports of services led the government to push up its previous estimate.  On a year-over-year basis, the economy grew 1.7 percent, down from 2.4 percent expansion recorded in the previous three months.
 
In February, retail sales rose a solid 1.1 percent from the previous month as rising home values and acceleration in job gains have spurred consumer spending. Yet, in March, the Conference Board Consumer Confidence Index dropped to 59.7 after rising to 68 in the previous month.
     

In February, the jobless rate decreased to 7.7 percent and the economy created 236 thousand jobs as employment increased in professional and business services, construction, and health care.
 
In March, the ISM Manufacturing PMI fell to 51.3 from 54.2, the highest level since June 2011. Industrial production expanded more than expected: 2.5 percent yoy and 0.7 percent mom.

 


Anna Fedec, anna@tradingeconomics.com
4/1/2013 3:06:13 PM