United States – Recovery still driven by services and held back by manufacturing and mining……<\/p>\n
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Sign up for our free newsletter to receive weekly news from BONDWorld. Click here to register for your free copy<\/strong><\/span><\/a> <\/strong><\/span><\/a><\/span><\/p>\n Intesa Sanpaolo – Research Department For professional investors and advisers only<\/strong><\/p>\n Euro area – Recovery on track; GDP growth may accelerate slightly between the end of 2015 and the beginning of 2016. However, uncertainty lingers, and downside risks to inflation are increasing.<\/p>\n Data released in the United States over the past few weeks confirmed that the US recovery is still driven by services, and held back by manufacturing and mining, due to the ongoing decline in oil prices and to the persistently strong dollar. Sector indices once again showed a contraction in the manufacturing sector (ISM at 48.2 in December), as opposed to expansion in the non-manufacturing sector (ISM at 55.3). The picture should remain intact in 1Q 2016, as long as services keep more than outbalancing weakness in the manufacturing sector, and consumption is supported by the expansion of the labour market and low gasoline prices. For what concerns monetary policy, focus will be on the path of inflation. The minutes of the FOMC meeting of 15-16 December provided indications in line with expectations for a gradual upward path of fed fund rates, dependent on the evolution of data, and in particular on the inflation trend. The message is generally dovish, and keeps focus on the progress of the price trend and inflation expectations. “Some” members said their decision to hike rates was a close call, given the uncertainty about inflation dynamics, and the Committee feels the “need to monitor the progress of inflation closely”.<\/p>\n The minutes confirm that consensus on the December rate liftoff was obtained thanks to the collective commitment to “closely” monitor the trend of inflation, and to gear the pace of future hikes to the inflation outlook.<\/p>\n The minutes do not stray much from the information already available, but they do add “colour” to the distribution of opinions on forthcoming hikes: for “some” members, the bar is higher now than it was in December to make another move, and all eyes are on prices.<\/p>\n Another increase in January is out of the question, whereas the March decision will depend on the evolution of inflation and of inflation expectations: in the next few months, the FOMC willmove very cautiously.<\/p>\n In the euro area, the data released in the past few weeks were mixed. The EU Commission’s economic sentiment index ECI improved by 0.7 points to 106.9, a high since before the GreatCrisis. The composite PMI rose less, by only 0.1 in December to 54.3. The German IFO indexdropped marginally, the French INSEE remained stable, the Bank of Belgium’s BNB indexsurged surprisingly to its highest levels in four years, whereas the ISTAT consumer andbusiness sentiment indices underwent a “physiological” correction from the multi-year highshit previously.<\/p>\n On the whole, sentiment among both businesses and consumers in 4Q 2015was at its highest in over four years, and is compatible with an acceleration in GDP growth in the euro area between the end of 2015 and the beginning of 2016, to 0.4-0.5% q\/q from0.3% q\/q in the summer months. While sentiment indicators remain very encouraging,industrial output data cast some doubts over the intensity of the recovery. Output surprisinglyfell in November both in France and in Germany, but while the French setback is largelyexplained by the energy item, the sharp contraction of capital goods was the main culprit inGermany. Data on manufacturing orders in Germany leave hope of a recovery in output starting in December, although much will also depend on the resilience of international trade.<\/p>\n In any case, euro area growth should still be driven by services and domestic demand, rather than by manufacturing, as signalled by the level of the services PMI (54.2), one point higherthan the manufacturing index. The slowdown in retail sales in November should only signal aslight loss of steam of the consumption trend, as households’ spending should continue to besupported by stronger purchasing power, allowed by the further drop in commodity pricesand by improving labour market conditions, as confirmed by November unemployment datain all the main countries. The main source of uncertainty for euro area growth are theeconomic and chiefly geopolitical risks weighing on the global scenario, on top of which<\/p>\n Source: BONDWorld.ch<\/p>\n","protected":false},"excerpt":{"rendered":" United States – Recovery still driven by services and held back by manufacturing and mining……<\/p>\n","protected":false},"author":2,"featured_media":3676,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"telegram_tosend":false,"telegram_tosend_message":"","telegram_tosend_target":0,"footnotes":"","_wpscp_schedule_draft_date":"","_wpscp_schedule_republish_date":"","_wpscppro_advance_schedule":false,"_wpscppro_advance_schedule_date":"","_wpscppro_dont_share_socialmedia":false,"_wpscppro_custom_social_share_image":0,"_facebook_share_type":"","_twitter_share_type":"","_linkedin_share_type":"","_pinterest_share_type":"","_linkedin_share_type_page":"","_instagram_share_type":"","_medium_share_type":"","_threads_share_type":"","_google_business_share_type":"","_selected_social_profile":[],"_wpsp_enable_custom_social_template":false,"_wpsp_social_scheduling":{"enabled":false,"datetime":null,"platforms":[],"status":"template_only","dateOption":"today","timeOption":"now","customDays":"","customHours":"","customDate":"","customTime":"","schedulingType":"absolute"},"_wpsp_active_default_template":true},"categories":[50],"tags":[],"class_list":["post-1849","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-weekly-analysis"],"blocksy_meta":{"styles_descriptor":{"styles":{"desktop":"","tablet":"","mobile":""},"google_fonts":[],"version":6}},"_links":{"self":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1849","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/comments?post=1849"}],"version-history":[{"count":0,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1849\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media\/3676"}],"wp:attachment":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media?parent=1849"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/categories?post=1849"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/tags?post=1849"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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