U.S.: For How Long Rates to Remain Low?
Forex December 6th, 2009
The economic recovery is unfolding in the United States, but it remains fragile and setbacks are possible. In Europe, sovereign concerns are still weighing on the Euro currency, albeit the manufacturing and service sectors are expanding further into the growth territory.
Signs of recovery are adding up in the United States, even though consumes are still weak and credit tight. In November, industrial production rose 0.8% from the expected 0.5% gain. This time, the advance was broad-based with about 80% of total industries registering some profits. Mining and manufacturing led the way, while vehicles and parts moved up 1.8%, after having declined in October. Finally, utilities output fell 1.8%. Capacity utilization increased instead to 71.3% from 70.6% in October. It was the highest level since December of last year and the fifth straight month of recovery, but still far away from the level of productivity seen during the credit era. New orders activity and the increase of foreign demand, will keep the positive momentum going in the next months as well. However, the recovery should be bumpy and set backs are possible, albeit the housing market might continue its positive trend. Housing starts rose almost 9.0% month-on-month in November, pairing most of the decline (10.1%) from the previous month, and moving real close to the positive territory on a year-on-year basis for the first time in many months. As a result, the Gross Domestic Product (GDP) should build up nicely during the fourth quarter of this year, after having been practically flat so far.
Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international media.
