Weekly Economic & Financial Commentary: U.S. Manufacturing Strengthening with Global Growth

Weekly Economic & Financial Commentary

U.S. Review

U.S. Manufacturing Strengthening with Global Growth

• Non-defense capital goods orders ex-aircraft, our preferred gauge of future business investment, rose a strong 1.3 percent in September, the third consecutive monthly gain of that size.
• New home sales rebounded 18.9 percent in September to a 667,000-unit annual rate, the highest level of new home salessince October 2007.
• Real GDP grew at a 3.0 percent annualized rate in Q3, toppingexpectations for a 2.6 percent gain. Given the possibility for hurricane-related noise in the quarterly data, the print appeared relatively devoid of head-scratching outliers.

Global Review

Less Policy Accommodation Slowly Coming Into View

• The ECB decided this week to “taper” its QE program further due, at least in part, to strong growth momentum. However, benign inflation means that any rate hikes are still some ways off.
• Stronger-than-expected U.K. GDP data in Q3 means that a rate hike by the Bank of England is likely at next week’s Monetary Policy Committee meeting.
• The Bank of Canada remained on hold this week, but it continued to indicate that further tightening, albeit at a slow pace, is likely in the quarters ahead.

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