US Economic Update – 14 November 2014

US economic data indicates a strong start to Q4; equity markets reach record highs once again

US equity markets reached record highs once again this week with the S&P 500 peaking at 2,046 while the Dow Jones closed 62 points higher at 17,364.

The positive performance from North American equities was supported by strong corporate earnings numbers from some of the US’s largest companies including; Walmart, Dr Horton, Lennar Corp and Zynga. It also came amidst a light week for economic data, with many of the major releases loaded at the back end on Friday afternoon.

The week’s headline event in the economic data department was the release of both retail sales and core retail sales figures in the US, with each survey reading coming in ahead of official projections.

Both measures logged a reading of 0.3% growth on a month on month basis, which compares well with the 0.2% growth forecast for each.

All in all, Friday’s data goes some way toward indicating that the US economy probably got off to a strong start for Q4.

In this regard, we note that in the wake of the release, Goldman Sachs announced via the MNI newswire that recent data suggests US growth is currently tracking at a rate of 2.7% for the quarter to date.

If this proves to be correct then it should place the US economy on target to achieve revised estimates from the IMF which, after a 2.2% weather induced contraction during Q1, suggested that overall GDP for the year would likely be in the region of 2.2%.

Looking to the immediate future, the week ahead sees FOMC minutes released for the most recent meeting, along with more housing market numbers and CPI inflation data. Official projections suggest that core CPI (ex food and energy) probably strengthened during the period, while construction activity is also expected to have picked up.

This is while consensus opinion at present appears to suggest expectations for a dovish tone in the FOMC minutes on the Wednesday, in light of the increasingly fragile outlook for the euro-zone and some emerging markets.

Dow Jones // 10 Minute Intervals

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