Japan PPI inflation slips to 11-mth low in July
The Atlanta Fed’s GDPNow estimate now predicts the U.S. economy will contract 2.8% in the first quarter. This is almost double last week’s prediction of a 1.5% drop.
The projected drop is a meaningful reversal from the estimate two weeks ago when it was estimated that the economy would grow 2.3%. Four weeks ago, the GDPNow model showed the U.S. economy growing 3.9%.
The new prediction follows today’s ISM Manufacturing PMI index for February, which was reported at 50.3%, 0.6% lower compared to the 50.9% recorded in January, and below the consensus of 50.8%.
The ISM’s New Orders Index dropped back into contraction territory after expanding for three months, registering 48.6%, 6.5% lower than the 55.1%recorded in January. Meanwhile, the Employment Index registered 47.6%, down 2.7% from January’s figure of 50.3%.
ING’s Chief International Economist, James Knightley, thinks tariff uncertainty may be playing a role.
“President Trump’s trade proposals are for tariffs to raise tax revenue while also boosting the competitiveness of US made products and to incentivise the reshoring of manufacturing activity to the US,” Knightley said. "However, the stop-start/will he-won’t he nature of tariffs is creating uncertainty with manufacturers seemingly concerned about the trading environment the they will find themselves in – remember new tariffs on Mexican, Canadian and Chinese imports kick in tomorrow with the threat that additional tariffs on other nations come in during the second quarter. As such we expect to see ongoing subdued activity until there is at least some clarity on the domestic situation and the tariffs that US exports may be subject to by foreign nations."