In the past few of working days, there has been a range of key economic data released in the US. Overall, the data has been weak and well below market expectations.
- A further decline in US house prices in March (ninth consecutive monthly decline in the Case Shiller House Price Index – see chart attached). Since their peak in 2006, US house prices have fallen by over 30%.
- A surprise drop in US consumer confidence for May. This is the lowest consumer confidence reading in six months – see chart attached.
- A lower than expected reading on the May Chicago PMI. The index fell to 56.6 in May, well below the expected increase to 66.6.
- A surprise decline in the Dallas Federal Reserve manufacturing activity index for May. Market was expecting a further increase.
- A shock ADP employment reading of only 38 000 jobs created in May. The market was expecting a rise of 175 000. While the ADP is not the official reading on US payrolls (that is expected out on Friday) it is generally a good indicator of the likely outcome. The market is currently expecting a payroll increase of 180 000 on Friday.
- The key ISM manufacturing index for May recorded a shock fall to 53.5. The market was expecting a slowdown to 57.1 from 60.4 in April. This is the lowest ISM reading since September 2009.
- The market was also expecting a lower vehicle sales outcome for May of 12.4 million units versus 13.14 million in April, however the data disappointed and came in below expectations at 11 million..
Recently, we highlighted that the US consensus GDP forecast for 2011 has been revised lower to 2.7% (see chart attached) from a recent high of 3.2% (as recently as in February 2011). Given the latest economic data, it is possible that the consensus forecast will be again revised lower in June. The official payroll reading due for release on Friday is going to be key and will be closely monitored, but the current data flow is pointing to mid-year slump in activity.
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