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The Week Ahead ...
The Week Ahead

Tues 24 September-FOMC meeting. Data released during the week has not made it any easier to predict what the FOMC will do when it meets on Tuesday-the decision remains finely balanced between keeping rates on hold and tightening.

15:00 Tues 24 September-Consumer Confidence (Sep). The index reached a six year high of 109.4 in August reflecting improved sentiment about both current business conditions and consumer expectations for the coming six months. The consensus expects the index to have slipped back a bit this month, to about 106.5.

15:00 Wed 25 September-Existing Home Sales (Aug). This number will provide interest this coming week given the unexpected strength of housing starts in August. The consensus expects sales to be unchanged at an annual rate of 4.1mn.

13:30 Thurs 26 September-Durable Goods Orders (Aug). Durable goods orders rose more strongly than expected in July, up 1.6% m-on-m, reflecting broadly based growth. The consensus expects orders to have been flat in August.

13:30 Fri 27 September-Q2 GDP (final estimate). There is unlikely to be any change to the Commerce Department's estimate of second quarter GDP growth of 4.8%, at an annualised rate.

The Week Just Past

Industrial production rose in line with market expectations in August, up 0.5% over the month. The capacity utilisation rate increased from 83.3 in July to 83.5 in August. Most of the gain came from mining and utilities output, while auto production fell after July's strong performance.

This latest piece of data does not give a clear signal one way or another about the way the Fed will act at the FOMC meeting on 24 September, although it does mark the fifth consecutive rise in production.

Housing starts rose strongly in August, up 4.5% in the month, to the highest level for more than two years. Figures for June and July were also revised higher. The data prompted a shift in financial market sentiment with most analysts agreeing that the data made a rate rise at the FOMC meeting on the 24 September more likely.

The July trade gap was $11.7bn, much worse than anticipated. Export weakness - a fall of 3=% in the month - was the surprise. If these figures are not revised, net exports could hold back growth in the third quarter.


July's merchandise trade deficit marked the worst monthly balance since the Commerce Department began issuing combined merchandise and services trade figures in 1992.

The deterioration reflected a surge in imports of cars, electronics and oil, (up 10%), in addition to a drop in volatile aircraft exports. There was a deterioration of trade balances with western Europe, Japan and China.

Imports have been boosted by the underlying strength of the US economy, as evidenced by demand for consumer goods, (imports from China increased 17%, as demand for toys, games, clothing and footwear grew). However, if the trade data show no improvement in August and September a growing deficit will be a significant drag on third quarter GDP growth.

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