US Economic Update – 26 September 2014

US durable goods orders collapse, GDP revised sharply higher; equities fall

With a lack of inspiring economic data emerging from developed nations during the opening to the week, the focus of investors has been largely toward US action in the middle east.

On Tuesday morning US markets opened to news that Barack Obama had ordered US fighter jets to attack  targets inside of Syria, an area that was previously off limits due to threats made by the Syrian government, which set the stage for a progressive decline throughout the following days.

While much of the week was relatively quiet in terms of economic data, core durable goods data released on Thursday appeared to indicate a collapse in US industrial activity during August, however; it is thought that this is largely the effect of a re-basing in output following the previous month’s surge.

Following on from durables data, Friday saw the release of final US GDP figures for the second quarter. These illustrated a sharp upward revision to output during the period, with the actual figure coming in at 4.6% as opposed to the previous estimate of just 4.2%.

All in all, the week’s events all point toward a US economy that has continued to gain momentum throughout the recent month therefore, closing the gap left by the weather induced contraction during Q1.

Consequently, we maintain our positive outlook for the economy going into the closing months of the year however; we continue to see both geopolitical and conflict risk as an ongoing threat to investment returns at present.

Looking ahead, US payrolls and unemployment data for September is set to provide an indication of whether, or how, the Fed’s policy stance could evolve ahead of the next FOMC statement at the end of October. These figures, due for release on Friday afternoon, are likely to be the main event for investors globally from an economic perspective.





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