Unlike the past weeks, this week had mixed data; optimistic and pessimistic, although overall economic conditions of the superpower remain weak and the revival pace continues on being slow, still some slight brightness and sentiments of hope were able to be spread this week regardless the debt-ceiling debate, the EU unsolved debt crisis and tightened financial markets conditions.
If truth be told as we start the week the FOMC Rate decision got released and the benchmark interest rate was kept unchanged and low between 0.0% and 0.25% as what was already highly expected since that the Feds along with other governmental and non-governmental organizations and institutions still strongly believe that low rates will support the economy amid the present weak economic conditions and support the present slowed down growth although the current recovery is still taking place at a unhurried and gradual pace and the labor market deterioration is slowly reviving.
In fact the Fed announced that its rate will be held at exceptionally low level through at least mid-2013 due to the current global and national weakened revival, pointing out and confirming that the world's leading economy growth was significantly slower this year, having in mind that the revised rise in gross domestic product of the superpower or its second reading for the second quarter came in at 1.3 percent; much lower than the growth rate of 1.8 percent that was forecasted by the market.
As for the nation's stumbling block; the deteriorate labor market, conditions are still seen deteriorated by the Feds as usual same as it was described by last released Fed's Beige Book, which is prepared as we know at the Federal Reserve Bank of Minneapolis, attesting across all twelve Federal Reserve Districts that economical growth expansion remained spotted but its pace has actually moderated throughout many districts as a result of the current weakened economical conjuncture.
However cheerful and unexpected data was released this week by the country's Labor Department as the applications for jobless benefits fell last week to a four-month low mainly as most of the companies have slowed actually the pace of firings although they remain discouraged to hire new employees, still labor conditions remain weak and are far from a full recovery, not forgetting nowadays debt-ceiling debate and tightening in financial market conditions.
In fact overall jobless claims data came out better than the market forecasts with on one hand the initial jobless claims for August 05 plummeting to 395 thousand; better than the predicted 405 thousand and the prior revised reading of 402 thousand from 400 thousand, while that on the other hand the continuing claims for July 30 dropped to 3688 thousand; better than the projected market reading of 3725 thousand.
Moreover as the week was ending we saw further optimism spread as the superpower's retail sales were actually able to climb up in July by the most in four months regardless overall persisting challenges and the present national and global weakened economic conditions, confirming that consumers remain encouraged to spend even if employment and the revival of the country have lost pace.
In fact the Commerce Department in Washington showed that the retail sales for July rose up to 0.5 percent as already forecasted; higher than a prior revised reading of 0.3 percent from 0.1 percent while that the retail sale less autos for the same period rose above the market expectations of 0.3 percent to 0.5 percent and the retail sales excluding auto and gas have also jumped over the market predictions of 0.2 percent faintly to come in at 0.3 percent in July.
Therefore it is clear that American consumers are holding up throughout the current weakened economical conjuncture of the world's leading economy with auto sales showing a 0.4 percent increase; cars and light trucks sold at a seasonally adjusted pace of 12.2 million in July from actually 11.4 million in June while that deliveries at Detroit-based GM rose up by 7.6 percent compared to last year.
Still the overall portrait of the present conjuncture remains unclear and gray with this week's preliminary University of Michigan Confidence coming in lower and gloomier at 54.9 from 63.7; indicating clearly that consumer confidence regarding personal finances, business conditions and purchasing power remains corroded throughout the recent hard and weakened economic conditions.
Furthermore throughout the week we saw the Commerce Department showing that the world's leading economy trade deficit widening throughout the last month of June to actually reach its highest level since October 2008 as a result of a significant fall of exports exceed while that the country's unemployment insurance payments fell down unexpectedly to a four-month low due to a lack hiring rather than an increase of firings.
If truth be told, the superpower's deficit of June exceeded the market forecasts of a deficit of only 48.0 billion as it widened actually to a deficit of 53.1 billion; worse of course than a prior revised deficit of 50.8 billion from a deficit of 50.2 billion mainly as American exports plummeted strongly throughout this month of June; the most since January 2009.
Now no wonder Canada; the world's leading economy major trading partner and neighbor, saw its deficit have also widened by 1.6 billion; exceeding once again the market projections of a deficit of 0.8 billion and worse of course than a prior revised deficit of 1.0 billion from a deficit of 0.8 percent, as the country's exports have weakened as well as a result of the current corroded global economic conjuncture and weak economic conditions of its major trading partner; the U.S.
Source: http://www.fxstreet.com/fundamental/analysis-reports/top-fundamental-stories/2011-08-13.v03.html
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