US Q4 Output Falters

(MENAFN- Daily Forex) The US economy grew at a slower rate than analysts had expected in Q4 2017. The predicted growth figure for the final quarter of the year was 3%, matching Q3 growth, but in the event, it came in below expectations at 2.6% (data for the US economy is always presented on an annualised basis). A preliminary analysis of the data suggests that an increase in US imports was responsible for the easing of growth. The data (from the US Commerce Department) means that full-year growth came in at 2.3% for 2017. The growth in the US economy was significantly up on the 2016 level of 1.5%, but less than the 3% target that US President Donald Trump had set. According to the IMF there has also been an upturn in the global economy, of course.

The USA imported 13.9% more goods in the final quarter of the year which represented the fastest rate of import growth seen since Q3 2010. The rise in imported goods outstripped a rise in the level of goods that the US exports to the rest of the world. The consequence of this, according to the Department of Commerce, was to shave 1.1% off the Q4 GDP figure.

The Q4 data is expected to be a blip and unlikely to derail the US economy from a 2018 growth figure of 3%. Analysts are relatively Bullish about the US economy which is likely to be helped by recent weakness in the Greenback which will make US exports more competitive and a strengthening of the crude oil price coupled with greater global demand as global economic demand picks up.

US manufacturers are believed to have been selling off their inventories (rather than producing new goods) which will have lowered economic activity. The inventories will need to be replenished going forward which should boost economic output.

The Dollar fell by 3.2%; 14% and 10% against the Yen, the Euro and Sterling across the full year in 2017, making American goods more affordable in these markets.

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