U.S. economic growth regained speed in the first quarter, but not as much as expected. The GDP grew 2.5 percent qoq, the fastest since the fourth quarter of 2010. The acceleration primarily reflected an upturn in private inventory investment and exports, a rise in personal consumption expenditures, and a smaller decrease in federal government spending. On a year-over-year basis, the economy expanded 1.8 percent.
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Although in April the jobless rate declined to 7.5% and employment grew by 165 thousand, it is too early to say that the labour market is recovering. In fact, the number of Americans seeking unemployment aid fell to 340 thousand last week, yet it increased to 363 thousand in the week ending May 11. |
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In spite of the automatic spending cuts and an expiry of a payroll tax cuts, consumer sector appears to be picking up. In April, the Conference Board Consumer Confidence Index jumped to 68.1 from 61.9 in March. In the same month, retail sales increased 0.1%, following a drop of 0.5% in March. |
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The manufacturing sector has been weakening. In May, Markit Manufacturing PMI fell to a seven-month low of 51.9. In April, the ISM Manufacturing PMI fell to 50.7 from 51.3 in the previous month. In the same month, industrial production expanded only 1.9% yoy after 3.5% gain in March. |
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Housing market may be improving. Although in April housing starts of 0.853 million units fell short of forecast, they were up 13.1% yoy. Also, in the same month, permits jumped 14.3%, existing home sales rose 0.6% and the sales of new single-family homes grew 2.3 % while prices climbed to record high levels. |
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