The American economy grew faster than first estimated, with GDP rising at an annual pace of 3.9% in the July-September quarterUS GDP beats forecasts - highlights start hereBank of England grilling: the key pointsMark Carney: automation is polarising the labour market 2.59pm GMT Over to Greece and the 48 hour talks taking place in Paris between the country’s government and the troika of lenders about exiting the bailout programme. Ahead of the meeting, one top official has described the talks as “make or break.” Helena Smith writes:“We are playing with fire and the troika have never played harder. We’re at risk of losing everything - all the things we have achieved so far - if these [talks] aren’t positive and people feel, once again, they are about to lose even more,” a senior goverment official told me.“If we don’t act on our promise to exit the bailout [programme], the risk of [main opposition] Syriza coming to power is very real and it won’t just be Greece, Europe will be thrown into turmoil. There is more uncertainty than many think, right now. You could say this meeting is make or break.” 2.35pm GMT The US housing market remains buoyant, with the price of single family homes increasing by more than expected in September on a year by year basis, albeit by less than the previous month.The S&P/Case Shiller index showed a 4.9% year on year rise in September, compared to forecasts of a 4.6% gain. The overall trend in home price increases continues to slow down.With the economy looking better than a year ago, the housing outlook for 2015 is stable to slightly better.US CASE SHILL better at 4.9% v 4.6% expected ..... grwth rate slowing ... but better than expCase-Shiller chart. YOY change pic.twitter.com/cGhoqwDuxtMiami is hot. Home prices up 0.64% in a month and 10.3% over the last year. 2.06pm GMT Capital Economics reckons today’s growth report means the Federal Reserve is likely to raise US interest rates in March 2015.They also flag up one disappointing change – “employee compensation” (pay, basically) were revised down for the second and third quarters.In particular, the second quarter growth rate was slashed from 5.3% to 2.8%, resulting in a downward revision to the savings rate. The latter is now estimated to have been 5.0% in the third quarter, down from the initial 5.5% figures. Nevertheless, strong employment gains and increasing hours worked will generate solid gains in labour income over the next few quarters. 2.03pm GMT Rob Carnell of ING agrees that the US GDP report is broadly encouraging:For instance, the upwards revision to equipment and software spending (business investment, now 10.7% from 7.2% initially), and personal consumption (consumer spending now 2.2% from 1.8%), and residential investment (homebuilding - now 2.7% from 1.8%).Whilst some parts of this release do suggest that the US economy has more momentum than initially indicated, both inventories and the defence component of government spending are likely to revert to being considerable drags in the fourth quarter, taking GDP growth closer to 2.0% than 3.0%, and the profile for GDP will remain very choppy, masking an underlying growth rate of between 2.5% and 3.0%. 2.00pm GMT The US GDP report helps to paint an “an increasingly rosy picture for the US economy”, reckons Dennis de Jong, managing director at UFX.comJanet Yellen will rightfully be thrilled with the growth shown since the last release of data, which defied expectations and nearly broke through the magical four per cent mark.US consumers have many things in their favour at present. Retailers will rightfully be bullish ahead of the traditional holiday shopping kick-off event Black Friday, as remarkably low gasoline prices fill the pockets of consumers with unexpected cash. The question remains, can retailers keep the tills ringing in the run-up to the holidays if OPEC announces a cut in production on Thursday?” 1.59pm GMT Another encouraging sign, US firms did not run down their inventories as much as first estimated. 1.57pm GMT The US GDP report also shows that US consumers spent more on ‘big ticket’ items in the last quarter; durable goods sales to consumers were up 8.7%.And investment in new equipment rose by 10.7%, as this chart explains:Buying big stuff way up RT @themoneygame: Q3 GDP Growth By Category http://t.co/iAvikqP9Ja pic.twitter.com/8zQmPJntUG 1.54pm GMT Q3 GDP revised higher on stronger personal spending and business investment, net exports add less, inventory drag is reduced 1.52pm GMT The US has posted its fastest six months of growth in over a decade, it appears.The 3.9% annualised growth in Q3 follows growth of 4.6% in the second quarter of 2014. You have to go back to 2003 to find two stronger quarters of growth.Whoa. We just experienced the strongest 6 months of growth in a decade per @toristilwell.(Which says more about how crappy the last decade was for growth than anything else. But still!) 1.41pm GMT America grew rather faster than the UK over the summer.Britain’s GDP rose by 0.7% in the third quarter of the year, which is an annualised rate of just over 2.8%. US #GDP for the 3rd quarter has just been nudged higher from 3.5% annualised to 3.9%.So up 0.1% in UK terms 1.40pm GMT Economists had expected US GDP to be revised down slightly, to an annual rate of 3.3%, so this is a ‘good number’... US Q3 GDP revised up to 3.9% annualized (from 3.5%). Well above TR consensus of 3.3%. 1.37pm GMT The US growth rate has been revised up because consumer spending was stronger than first thought, at +2.2% (up from +1.8%).Business investment was also higher than initially estimated, at +7.1% (up from +5.5%).*REVISION TO Q3 GDP LED BY GAINS IN CONSUMER, BUSINESS SPENDING 1.31pm GMT Breaking: The US economy grew by an annualised rate of 3.9% in the third quarter of 2014, or almost 1% on a quarterly basis.That’s an increase on the initial estimate, of 3.5% growth (annualised), and shows that America’s economy is outpacing rivals such as Europe and Japan. 1.25pm GMT Nearly time for the next event of the day, the second estimate of US GDP for the third quarter of 2014.The first estimate showed America’s economy grew at an annualised rate of 3.5% in July-September; economists expect a slight downgrade..... 1.15pm GMT A brisk recap of the Treasury hearing (full coverage starts here):“Certainly in recent months, the global economic conditions have deteriorated in two of the major economies, Europe and Japan......the geopolitical situation remains difficult and the combination of that suggests a heightened degree of external risk to the United Kingdom.”Carney's "gloomy prognosis" for the Eurozone "is an accurate one", he says.Carney on immigration: "These are intensely political issues. We don't want to be in the middle of an election campaign." 12.33pm GMT The pound dipped during the Treasury hearing, down about 0.4 of a cent against the US dollar at $1.5667.Carney, along with three of his colleagues from the Monetary Policy Committee, referred to the external factors such as the continued stagnation in the euro zone which pose a very real threat to UK growth. They have continued the dovish theme from the Inflation report which was released on November 12th, and warned that downside inflation risks remain whilst growth in the UK for 2015 is likely to be slower than this year. 12.15pm GMT The session ends with Andrew Tyrie, committee chairman, homing in on the issue of migration again (see earlier posts).Does Mark Carney think there has been a change in UK policy on migration? 12.06pm GMT Is the US exporting disinflation, or even deflation, through the commodities market now that its quantitative easing programme has ended?It is hard to say that, Kristin Forbes replies. She points out that the US inflation rate is higher than the UK, and the higher dollar should push up the cost of imports from America (which should raise inflation) 12.05pm GMT Are these secular trend in the labour market so widespread that migration becomes a political issue, asks Conservative MP Steve Baker.Carney declines to comment on politics. 12.04pm GMT Ouch. Carney takes issue with a recent Financial Times article that claimed the Bank’s forecasts were “nonsense” because they suggested the surge in labour market slack in the crisis would only occur once every 254 million years. This is an erroneous and ‘misleading’ conclusion, the governor says; apparently the FT’s interpretation of standard deviations wasn’t right. 11.46am GMT Mark Carney goes on to reiterates his point that technology is driving structural changes in employment. 11.35am GMT Is the internationalisation of the UK economy helping to keep wages low?We have seen net migration into the UK, Mark Carney says. 11.27am GMT Carney says he has seen some evidence that the bonus cap for bankers is pushing up fixed salaries 11.26am GMT Mark Garnier MP asks if Mark Carney has become softer and more compassionate about those households who would struggle to cope with a rise in borrowing costs.Carney says he realises there is ‘sensitivity’ over the impact of interest rate hikes, and that is an important factor. 11.20am GMT A reminder that the Treasury committee hearing is being streamed live, here (after that early technical hiccup) 11.18am GMT The committee are trying, and largely failing, to pin the Bank down for an estimate on the UK economy’s trend growth rate.It all depends how much of a recovery we see in productivity, they say. But Carney suggest a figure of, perhaps, something like, 2% to 2.25%. Probably. 11.15am GMT The FT have the key quote from Kristin Forbes, in which she explained how there are upside, as well as downside, risks to the UK:Where my view is slightly different than probably the median view of the nine of us on the Committee, is that I put slightly more probability on the risk that the global economy could be somewhat stronger than in our baseline forecast, especially the US economy, recently some of the data has been stronger, so there could be less of a drag on our forecast from the external economy. 11.06am GMT John Thurso MP takes up the questioning: The Wall Street Journal reports that you have solved the puzzle of weak productivity, governor. Care to share the secret? Did I? Carney replies, looking a little baffled. I’ll have to dig out my old copies of the Journal and remind myself how I did it. 11.01am GMT Are UK consumers and businesses ready for interest rates to rise?Ian McCafferty reckons consumers are not more sensitive to higher borrowing costs than in previous cycles. 10.54am GMT Forbes says her personal assessment of the economy is ‘less gloomy’ than some headlines.And the fact that UK consumers have been drawing down on their savings to fund spending is a sign of confidence, she suggests. 10.54am GMT Kristin Forbes points out that the policymakers have repeatedly started a year with optimistic forecasts, but ended up downgrading them before the 12 months were out. 10.53am GMT Carney reiterates that the stagnating eurozone economy is a serious threat to the UK economy. There is a danger that the downside risks we see could transpire, the governor says, especially as our forecast is predicated on unconventional monetary policy from the European Central Bank. 10.50am GMT Is there any good news in the global economy, MPs ask.Ian McCafferty (a hawkish member of the MPC), claims there are. He suggests the fall in the oil price could stimulate the global economy more than expected (lets hope so). 10.48am GMT 10.42am GMT Does the Bank of England agree with David Cameron that red warning lights are flashing on the global economy?Governor Carney says he’ll leave that particular phrase to the prime minister.Carney Says Japan, Euro Area Have Weakened, U.s. Is Different 10.35am GMT John Mann suggests that the Bank’s regional agents are failing to measure the UK labour market properly, because the spike in self-employment and migration has caught them out.Isn’t there a danger that some of your data models are outmoded? 10.28am GMT Mann invites professor Kristin Forbes, who joined the MPC this summer, to comment on the competence of her colleagues.I’ve been very impressed by the knowledge and expertise of the Bank, says Forbes, padding the question back carefully. 10.26am GMT John Mann MP chides Ian McCafferty for warning about wage growth, saying the MPC should have been encouraging it not flapping about the impact on inflation.Kristin Forbes, MPC member, agrees that wage growth has been too low -- we need to see incomes rising so that household consumption doesn’t slow. 10.23am GMT Why did the MPC get its inflation forecasts so wrong?Ian McCafferty says the BoE didn’t get it wrong -- we expected inflation to fall, and it has. The oil price has fallen faster than we expected, though. 10.20am GMT #BoE Carney says MPC discussions on timing of tightening, not easing 10.20am GMT Has the Bank done any work on further easing measures to fight off deflation?Mark Carney says it is “more likely than not” than inflation will fall below 1% un the next few months, leading him to write to the chancellor explaining why the CPI has not been kept within one percentage point of the 2% target. 10.16am GMT What are the chances of inflation being below the BoE’s target? 10.13am GMT Tyrie then challenges governor Carney over his forward guidance policy (that interest rates would not rise until the data showed the economy was strong enough).You claim it’s an idea whose time had come, but in reality it’s an idea whose time had gone, Tyrie jibes (because unemployment fell much faster than the BoE expected). 10.12am GMT Hmmm, the web feed from parliament has crashed, but the session is being streamed on Bloomberg TV (and probably on the website too) 10.08am GMT Andrew Tyrie MP begins the session by asking why the minutes of the last MPC meeting showed a wide range of views between members.Ian McCafferty (one of two hawks who voted to raise rates), says there is now “a balance of views” between the seven dovish MPC members over how much spare capacity remains in the UK economy, and the risks of inflation overshooting/undershooting predictions. 10.04am GMT Over in Parliament, the Treasury Committee is starting to question the Bank of England over the latest quarterly inflation report.Governor Mark Carney is there, along with deputy governor Sir Jon Cunliffe, and Monetary Policy Committee members Ian McCafferty and Kristin Forbes. 10.01am GMT Mortgage approvals in the UK fell by 16%, year on year, in October, in the latest sign that the housing market is slowing.British banks approved 37,076 mortgages last month, down from 43,918 a year ago and 39,127 in September.“Today’s figures suggest that the cooling of the property market has continued in recent weeks” 9.46am GMT Over in the Netherlands, banking unions say they’re shocked by the news that ING is cutting around 2,700 positions. 9.20am GMT Here’s a nice chart, from Nordea Markets’ European economist Holger Sandte, showing how parts of Germany’s service sector have been lacklustre since the collapse of Lehman Brothers in 2008:Why is #GDP growth so weak in #Germany? Part of the answer lies in the #servicesector pic.twitter.com/GT1KXXJpAl 9.17am GMT Stat of the day?Brits own 70% of all the credit cards in Europe, according to the FCA: http://t.co/PznpYzIzGk 9.07am GMT Are credit card companies letting consumers down? The City regulator is preparing to find out....At £150bn a year, the UK credit card market is the largest in Europe, with 30 million people holding cards with total debts of £60bn. The Financial Conduct Authority said it would launch an investigation into the market when it took over regulation of the sector in April. On Tuesday it revealed the full scope of its inquiry. It will look at the complexity of credit cards, the fairness and transparency of their terms and conditions, and whether consumers can easily switch between different credit card providers.... 8.52am GMT Back in the UK, the Nationwide Building Society has predicted that interest rates will remain at their current record lows until at least next April.As we look ahead to the remainder of the year, we do so against a background which has seen unemployment falling sharply and the economy growing at an annual rate of around 3%. However, with few signs that inflationary pressures are building, and renewed concerns about a slowdown in the Eurozone, we do not expect the Bank of England base rate to rise before the start of our next financial year, with future rises being gradual in nature and settling below pre-crisis levels. 8.38am GMT Germany’s stock market is outperforming the rest of Europe this morning.The DAX has gained 20 points, or 0.2%, in early trading. The French CAC is up just 0.1%, while the FTSE 100 is flat. 8.28am GMT The BBC’s Europe editor, Gavin Hewitt, agrees that this morning’s German GDP report is encouring, even though growth was so weak at just 0.1% quarter-on-quarter:Some slightly better statistics out of Germany. Consumer spending rose by 0.7% in the third quarter and exports were 1.9% higher. #Germany 8.14am GMT UK DIY Kingfisher is still finding France tough, though.Trading conditions in our largest and most significant market, France, were particularly difficult and deteriorated across the quarter, impacted by the weak economic backdrop. In the UK however, where conditions have been more favourable, we have delivered LFL growth with Screwfix performing particularly well, delivering a 25% increase in sales on top of very strong growth last year. Overall, we remain cautious on the outlook, especially in France, and continue to focus on margin and cost initiatives to support our performance. 7.56am GMT Some rare, and welcome, good news from France just hit the wires. French industrial confidence production has risen this month, according to statistics body INSEE’s monthly survey of the sector (online here). Morale rose to 99 on Insee’s index (up from 98 in October), which is just one point shy of the long-term average. 7.47am GMT Economists are encouraged to see that German companies cut their inventories last quarter.That may seem odd – falling inventories is usually a sign that bosses have lost confidence, or seen a dip in demand. Strong negative growth contribution from stocks on German GDP in Q3 bodes well for Q4 and growth acceleration. https://t.co/L25E7Q4ZeiHmm, inventories could give Germany a good fourth quarter given that they ate away 0.5% worth of GDP growth in Q3 7.35am GMT Germany avoided falling into recession in the last quarter thanks to a rise in private spending, which made up for a worrying drop in business investment.The German economy turned out to be stable in a difficult global economic environment. 7.33am GMT Good morning, and welcome to our rolling coverage of the world economy, the financial markets, business and the eurozone.Lots of economic news this morning, starting with confirmation that Germany has avoided recession. The German Statistics Office has just announced that German GDP rose by 0.1% in the third quarter of 2014, in line with the preliminary estimate two weeks ago. Continue reading...
 |
| READ THE ORIGINAL POST AT www.theguardian.com |
