New orders for US durable goods rose in July, offering hope that the economy could avoid a double-dip recession as speculation of another round of quantitative easing increases. Durable goods orders jumped 4% last month as demand for vehicles and airplanes surged, more than erasing June’s 1.3% decline.
July’s figure came in at double analysts’ expectations. Yet non-defence capital goods orders excluding aircraft, a closely-watched indicator of business spending, fell 1.5% after rising 0.6% in June.
Despite the increase in durable goods orders, the US economy grew much slower than previously thought in the second quarter, as GDP came in at a revised 1% for the period, down 0.3% from an earlier estimate of 1.3%.
Yet the revised figure was aligned with the market consensus, which assumed that the impact of a widened trade deficit and inventory drag would pull growth lower.
Economic growth in the UK, meanwhile, slowed in the second quarter as manufacturing lost steam, while the services sector also slowed.
GDP rose a meagre 0.2% from the first quarter, the same level as estimated by economists a month earlier, as output in the services sector fell by 0.1% in June.
The economy has barely expanded since September as government budget cuts and accelerating inflation dampen consumer sentiment.
Preliminary figures of the Purchasers Managers Index (PMI) for manufacturing in the eurozone in August were marginally stronger than bleak market forecasts had predicted.
The PMI figure, which came in at 49.7, registered its first sub-50 reading since September 2009, although economists had predicted a slightly steeper fall to 49.5.
A reading above 50 indicates that growth is being experienced in the sector while a figure below 50 signifies a contraction in activity.
Finally, a separate index of economic sentiment in Germany – the ZEW – indicated that the slowdown was spreading beyond the 17-nation’s periphery and taking root in core members such as Germany.
This article was compiled by Bank of Valletta plc for general information purposes only.