US: Leading growth indicators are still looking strong – ABN AMRO

Bill Diviney, senior economist at ABN AMRO, suggests that the macro data in the US continues to suggest an economy growing at pace that is well above potential even though they expect growth momentum to slow significantly over the coming quarters,

Key Quotes

“Following the strong November ISM manufacturing PMI earlier in the week, which showed a surprise rebound in the new orders index, the non-manufacturing PMI also showed a surprise pickup to 60.7 – the second-highest reading since 2005. Consistent with the manufacturing PMI, the rise was driven by the new orders index, which bodes well for near-term growth prospects.”

“There are pockets of softness in the US economy (for instance housing), and we think on balance growth momentum is currently peaking – driven by a turn in the investment cycle, fading fiscal stimulus, and the lagged pass-through of Fed tightening. However, in the near term at least, the economy looks to remain on a very solid footing.”

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