The U.S. economy grew faster than previously thought in the third quarter, according to a second estimate from the U.S. Bureau of Economic Analysis on Wednesday. GDP in the U.S. grew by 2.9% YoY in Q3, according to the revised figures (U.S. GDP had shrunk 0.6% YoY in Q2 and 1.6% in Q1). This represents an increase from the previous estimate of 2.6% growth, showing the U.S. economy is still faring well in a higher interest rates environment.
The Institute for Supply Management showed on Thursday that the manufacturing sector grew for the 30th month in a row but was barely above contraction in November. The ISM’s index slowed to 49%, barely above the contraction threshold at 48.7%. This is the third straight decline as demand for manufactured goods eased. The slowdown was broad-based as production, inventories, new orders, prices paid, and employment all slowed down on the month.
Overall demand remained robust as holiday shopping kicked off in October, according to data on inflation, spending and income from the Bureau of Economic Analysis released on Thursday.
The Federal Reserve’s preferred inflation metric – the personal consumption expenditures (PCE) price index—came in better than expected. While overall PCE inflation was unchanged at 0.3% MoM, core inflation slowed significantly to 0.2% from 0.5%. On an annual basis, inflation eased to 6.0% while core inflation was down to 5.0%.
International Monetary Fund Managing Director Kristalina Georgieva said on Thursday the chance of global growth falling below 2% next year was increasing due to continued effects of the war in Ukraine and simultaneous slowdowns in Europe, China and the United States.
The IMF in October cut its global growth forecast for 2023 to 2.7%, compared to a 2.9% forecast in July, amid colliding pressures from the war in Ukraine, high energy and food prices, inflation and sharply higher interest rates, warning that conditions could worsen significantly next year.
The highly anticipated monthly Nonfarm Payroll report on Friday showed that the U.S. economy unexpectedly added 263K jobs in November, beating market forecast of 200K, following a print of 284K in October, despite a wave of layoffs that have hit the tech sector in recent weeks. While this is the smallest gain since April 2021, the labour market continues to be healthy and above the pre-pandemic average of 150-200K new jobs a month.
