US industrial production exceeds expectations

Daniel Richards - MENA Economist
Published Date: 17 May 2018


US industrial production climbed 0.7% m/m in April, exceeding analyst expectations of 0.6% and in line with the previous month, which was revised up from 0.5% previously. Manufacturing output was a key driver of the increase. This expanded 0.5%, compared to flat growth the previous month, supporting the view that tax cuts are starting to boost household spending. Other notable points include a 1.1% m/m gain in mining output, reflecting the increase in activity in the oil sector as global prices have risen.  Housing starts data were also released, which at 1.29mn were down on the previous month’s 1.34mn. Nevertheless, houses authorised but not yet started came in at 163,000, up 14% y/y, which will support the sector in the coming months. Homebuilders remain positive that tax cuts will translate into solid growth in the industry over the year.

Japanese machinery orders declined 3.9% m/m, compared to expectations of a 3.0% fall. This followed disappointing GDP data released yesterday. However, the outlook for machinery orders in the coming months is brighter, supporting the view that real GDP growth will pick up. The survey done by the Japanese Cabinet Office alongside the data release suggests that machinery orders in the second quarter will be much stronger, with respondents forecasting growth of 7.1% in Q2.

In Turkey, the central bank issued a statement looking to reassure markets after the lira fell to a record low of TRY4.5000/USD in the day. It said is ‘is closely monitoring the unhealthy price formations in the markets’, adding that ‘necessary steps will be taken.’ Tunisia’s central bank held its benchmark interest rate at 5.75% yesterday, despite inflation hitting a 25-year high of 7.7% in April. Growth data was also released, showing a 2.5% rise in Q1 2018, compared to 1.9% in the same period a year earlier.

US industrial production, % m/m

Source: Emirates NBD Research

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