US macro scorecard - August

A round-up of the most widely followed monthly macro data points from the US, compared to expectations and the previous month's results.

Source: Bloomberg, Emirates NBD Research

All eyes were on the FOMC on September 22, looking out for any sign of imminent tapering. As it was, the Fed decided to hold policy steady for the time being, with a strong nod towards tightening down the line that could come ‘as soon as the next meeting.’ In terms of growth, the 2021 real GDP forecast was revised down to 5.9%, which if realised would still be a substantial level of growth, but is considerably slower than the previous, bullish, projection of 7.0% made in June.

The growth downgrade came as little surprise in light of recent data points, and indeed the OECD also revised down its outlook for US growth this year earlier this week, from 6.9% to 6.0%. When looking at the largely red macro scorecard above there was clearly a slowdown over August, with most of the most-followed data releases on Bloomberg missing both the previous month’s levels, and also analyst expectations. The Citi Surprises Index has been firmly in negative territory since the end of July, which almost coincides with the surge in cases of coronavirus in the US over the summer. The spread of the Delta variant has seen cases rise to an average of 136,000 a day in August, and this was apparent in the data releases for the month.

The most headline-grabbing was the NFP report, which missed projections by some half a million, and was only around a quarter of the previous two months. There are some structural issues at play here (US labour imbalance highlights underlying frictions), but the coronavirus no doubt played a substantive part, especially given that retail and hospitality were the among the worst-performing sectors. The friction in the labour market we have written about previously is also becoming manifest in the US surveys. The ISM manufacturing survey did edge up in August but still missed expectations, with the factory employment measure falling to a nine-month low as workers remained hard to find.

Ongoing fallout from the crisis around supply chains is also still weighing on growth, as it is in other developed markets. This is hitting on both ends – industrial production rose by less than expected last month, disrupted by both rising prices for raw materials and the damage caused by Hurricane Ida, while these rising prices are also deterring some consumers. Retail sales did surprise to the upside last month, but that was largely on base effects after the July contraction was revised to be even larger. Spending in restaurants was constrained by Delta fears, while online spending surged, helping to boost the headline figure.