Key US Macroeconomic Indicators Continue Positive Development

Quarterly GDP in the US was revised up to 2.1%, overshooting market expectations of precise 2% for the third quarter of 2015. This is the sixth time in a row when the recovery of the US economy turns out better than expected by analysts. Quarterly growth in the first quarter was -0.7% because of the recovery after the hard winter, whilst the summer was positive for the economy since it expanded by 3.7% in the second quarter of 2015.

According to plentiful experts and a series of different sources of analytics, this should be enough for Janet Yellen to fulfill the promise to raise the rate at the meeting in December. However, the main focus still remains on the labour market. Fortunately, the previous week proved that the situation there is developing according to the optimistic market expectations.

Unemployment claims decreased to 271,000, continuing their medium-term downwards crawl. The result was almost perfectly in line with expectations of 272K, unlike two weeks ago, when the unemployment claims scored at 276K.

As we have outlined last week, describing the causes of widening of growth gap between the US and EU, the equilibrium on the labour market will have the largest weight of all arguments for the decision on the rate in December.

The inflation in the US has renewed its positive trend after two pessimistic months – the month-over-month Consumer Price Index recovered from -0.1% in September and -0.2% in October to the growth of 0.2% last month. Excluding food and fuel, more volatile commodities, Core CPI has also scored 0.2%, continuing the positive trend.

After this result, there is a very high possibility that the index will reach the figure of 2% annual growth at the end of 2015. Despite the fact that the Fed does not show their concern about price development, it is a significant argument about the increased demand of consumers, which is an obvious consequence of the improved situation on the labour market.