|
Forex outlook:
U.S. manufacturing growth in June probably stayed close to the highest level in 13 months, a sign demand is picking up as businesses replenish stockpiles, economists said before a report today. The Institute for Supply Management's manufacturing index stayed at 55 for a second month, according to the forecasts. Improvement in manufacturing will help the economy to strengthen during the rest of the year as declines in homebuilding gradually exert less of a drag on growth, economists said. Manufacturers are expanding to meet demand and rebuild inventories after drawing them down in prior months.
Federal Reserve policy makers kept the benchmark U.S. interest rate at 5.25 percent last week and reiterated the economy is likely to expand at a ``moderate pace.''
The economy grew at a 0.7 percent pace in the first quarter, the slowest in four years, the Commerce Department reported last week. Companies reduced stockpiles at a $4.2 billion rate in the first three months of the year, cutting almost one percentage point from growth. More recent figures suggest companies have trimmed stockpiles to a satisfactory level and are now gearing up for higher orders. As companies step up spending, the economy will accelerate, even with housing remaining a burden on growth and consumer spending moderating, economists said. While government figures showed orders for durable goods such as cars and refrigerators dropped more than forecast in May, raising concern about the recovery in manufacturing, other regional reports for June were more optimistic. The National Association of Purchasing Management-Chicago's measure of business activity held near a two-year high in June, the group reported last week.
Manufacturing in the Philadelphia region accelerated in June at the fastest pace in more than two years as orders surged, the Fed Bank of Philadelphia said June 21. Factories in New York state expanded at the fastest rate in a year last month, the Fed Bank of New York said June 15.
Here are the highlights of US economic indicators to be released this week, which is shortened by the July 4 Independence Day holiday. On Monday the manufacturing pickup of recent weeks should show up in the June ISM manufacturing index. The median forecast is 55.4, up from 55.0 in May. Strong showings in the regional Fed manufacturing indexes 'suggest that manufacturing continued to surf the inventory replenishment wave a little higher in June.' Tuesday Contrary to the indexes, the big hit from Boeing and general weakness in durable goods orders announced last week should pull the June factory orders number down to -1.3 pct from +0.3 pct in May. Even excluding transportation, the expectation is -0.1 pct, down from +0.7 pct, and 'raising new doubts on the durability of the factory recovery' .Thursday, there has been a small trend toward higher weekly jobless claims numbers. They're expected to rise 2,000 to 315,000 for the week ending June 29. That trend 'is a sign that the so far firm US labor market may be softening a bit,' says Roger Kubarych at HVB. The June ISM non-manufacturing index should pull back a bit to 58.1 from 59.7 in May. On Friday, June's non-farm payroll report is the big number for the markets this week. The higher weekly unemployment claims numbers are 'why we don't expect the June number to be quite as strong as May's 157,000 result,' says Jacqui Douglas at TD Bank. The median forecast is for 130,000 new jobs and a steady 4.5 pct unemployment rate. Bank of America's Pete Kretzmer predicts 'payroll growth is likely to remain sluggish over the next few months, as the economy reacts to higher interest rates and gasoline prices.'
|
