Wide Angle

US GDP growth was revised downwards in Q1 from an annualised rate of 2.4% to 1.8%. Business investment increased only 0.4% compared to preliminary estimates of 2.2%. The increase in consumption was revised downwards from 3.4% to 2.6% as consumer spending was scaled back due to income and increases in payroll taxes. This calls into question the Fed’s optimism: to meet its full-year 2013 forecast of 2.45% growth, based on Q2 growth of 1.5%, H2 growth would have to reach 3.3%, a massive acceleration that is not in the cards for the moment.

Industrial production stagnated in May after monthly declines of 0.4% and 0.3%, respectively, in April and March. Retail sales held up better, rebounding 0.6% in May after 0.1% in April and -0.3% in March. Total consumption increased 0.3%, reversing a similar decline the previous month. In real terms, the increase was 0.2%, driven by durable goods purchases (1%) and bolstered by a rebound in automobile purchases.

Household confidence has improved. The Conference Board’s index gained 7.1 points to 81.4 in June, the highest level observed since June 2008. Lastly, capital goods new orders (excluding defence and aircraft) increased 1.1% in May after 1.2% and 1.1% the previous months. Shipments also increased by 1.7% following a 2% contraction in April. These figures seem to announce a turnaround in investment in the months ahead.

The rebound in the housing sector has been confirmed, and so far the recent increase in mortgage rates has not had a visible impact. Existing home sales increased 4.2% in May, bringing year-on-year growth to 15.2%. In the new home segment, sales were up 2.1% to an annualised figure of 476,000 units, the same level as in July 2008. Housing starts increased 5.8% during the month to 910,000 units. According to the National Association of Home Builders (NAHB) survey, the confidence index rose to 52 in June, from 44 and 41 the previous months. This is the highest score since 2006. The current sales index increased 8 points to 56 and the perspective sales index gained 9 points to 61. The S&P/Case-Shiller house price index for the 20 largest metropolitan areas was up 0.6% for the month to 12.1% in April.

BY Philippe D'ARVISENET

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