hotandcold data still see us economy gaining
Last Updated : GMT 11:59:16
Egypt Today, egypt today
Egypt Today, egypt today
Last Updated : GMT 11:59:16
Egypt Today, egypt today

Hot-and-cold data still see US economy gaining

Egypt Today, egypt today

Egypt Today, egypt today Hot-and-cold data still see US economy gaining

Official figuers point to modest but steady gains in US economic activity,
Washington - AFP

US industrial production and housing starts picked up encouragingly in July but inflation remained stubbornly low, continuing the mixed message on economic strength, official figures showed Tuesday.

However, the signal amidst the noise still points to modest but steady gains in economic activity, according to initial analyst reactions.

Industrial production made its largest gain in a year last month, rising 0.7 percent and bounding past analyst forecasts, according to the Federal Reserve.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the rise reflected a rebound in investment in the energy sector, with a 4.7 percent increase in oil and gas well drilling, reversing earlier declines in capital expenditures.

"The base is very depressed but replacing the drag from this sector with a modest gain would be very welcome," Shepherdson said in a research note.

Manufacturing was also strong, recording its best month in a year, with a 0.5 percent monthly gain.

Michael Montgomery, US economist at IHS Global Insight, said the hot summer appeared "to have put a spark under the manufacturing segment" but odds were this would not last.

Housing starts, a volatile indicator, also rose 2.1 percent during the month -- with three-month averages for single family dwellings rising 0.5 percent to an annual rate of 770,000 while multi-family starts rose 5 percent to 441,000.

Building permits, however, were down 0.1 percent, with the single-family category losing 3.7 percent, something Shepherdson called "puzzling."

"The gap between the sales and permits numbers is not unprecedented, but it is wide, and we have to expect permits to rebound strongly in the near future," he said.

However inflation -- a touchstone of monetary policy -- stalled for the month, with the Consumer Price Index unchanged after gains of 0.2 percent in May and June.

Core CPI, the index for prices less food and energy, rose at its slowest rate since March, or 0.1 percent.

But there were encouraging signs in the details, according to Blerina Uruci of Barclays.

"The downside surprise relative to our expectations seems concentrated in highly volatile components," she said in a research note, adding that increases in housing costs remained solid.

"Domestic price pressures remain strong as slack in the economy has diminished," she added, "and we expect core services CPI to continue driving inflation higher."

Equities markets appeared to shrug in indifference on Tuesday, with major indices all down less than half a percent just after midday in New York after hitting fresh records on Monday.

Thursday's data suggest that, as the Federal Reserve reviews monetary policy and interest rates next month, it will have yet another batch of contradictory signs to ponder.

New York Fed Chairman William Dudley said Tuesday though that underlying trends point to general health in the economy.

"In general, I think the economy is going to be better in the second half than the first half," he said on Fox Business News.

"The labor market will continue to tighten. In that environment, I think we're closer to the day when we are going to have to snug up interest rates a little bit," he added.

"That's good news."

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