The data out of the US on Friday was a tad worrisome. In fact, at one stage during the day it looked as if US markets were in for something of a collapse, although the Dow finished Friday less than 0.1 points down on the day before – at 14865.06 from 14865.14 on Friday.
Two significant pieces of data on the US economy were published on Friday, and neither was good.
First there was the US Consumer Confidence Index, published by the University of Michigan. This fell to a nine month low. The Conference Board measure will be out at the end of this month, and if this supports the findings of the University of Michigan that will be a blow.
Secondly, US retail sales saw a 0.4 per cent month on month fall in March. Especially worrying was that discretionary items, such as sales of electronics, saw an particularly sharp fall.
What with disappointing jobs data out on the Friday before last, (88,000 increase in non-farm payrolls, the smallest rise since June Last year), and purchasing managers’ indices for both US manufacturing and non-manufacturing down on the previous month, the runes seem to point to a downturn Stateside.
Mind you, all that woe was not enough to stop the Dow and S&P hitting all-time highs last week, and Friday’s close was below that peak by the tiniest of margins.
Chris Williamson at Markit said: "The concern is that growth could slow again in the second quarter. There are suggestions that the downturn in March could have been caused by temporary factors such as the timing of Easter and cold weather, but the fact that consumer confidence fell markedly during the month suggests otherwise, and that instead there is an underlying weakening of demand occurring.
“This weakness is possibly linked to increased payroll and income tax hikes which took effect at the start of the year, and will inevitably add to worries that the US economy is slowing as we move into the spring as automatic budget spending cuts come into force. With this in mind, the Fed will be more cautious about sending signals that it is preparing to ease back on policy stimulus. “
© Investment & Business News 2013