Economists are returning their focus to the USA where high unemployment and a historic housing slump remains an issue of concern.
The US economy remains troubled – not weak enough to signal an imminent downturn but not strong enough to breed confidence in businesses to start hiring again.
A change in fortunes on either side of the Atlantic has been revealed in the latest economic data, with a strong Germany propelling the eurozone while the outlook appears bleak in the US.
“It’s somewhat ironic but significant that the U.S. slowdown appears to have been triggered by debt concerns in Europe” said Jim O’Sullivan, chief economist at MF Global in New York, “and in the end European growth is showing a pick-up” .
“The question we’re left with now is, ‘Did this turmoil just set back or really short-circuit the recovery?’”
Data over the coming week should help direct forecasters the right ways and among key releases are industrial production for July.
Perhaps even more timely is the Philadelphia Fed’s survey of regional manufacturing activity.
Further firming is expected in both of these reports, with a growth of approximately 0.5% for US industry.
Ground-breaking on new homes is now at under a quarter of its boom-time peak following a four year slump, is likely to have stabilized at around a 560,000 unit annual rate after the expiration of housing tax credits.
Steadfast housing weakness and a stubbornly high unemployment rate of 9.5 percent were just two of the factors that led the US Federal Reserve to try to offer even more monetary stimulus to the economy last week.
