U.S. Growth Outpaces Rivals, But Real Factory Output Trails Expectations

(MENAFN- The Rio Times) The latest U.S. data shows an economy that looks powerful on the surface but more complicated underneath. Growth in the second quarter reached 3.3% annualized, far stronger than Europe or Japan.

Households continue to spend, with July personal consumption up 0.5% and incomes rising 0.4%. Inflation, measured by the Fed's preferred PCE index, held steady at 2.9% year over year.

That is above target but no longer climbing, giving consumers more breathing space. Manufacturing, however, is where the numbers appear to clash. On August 21, business surveys reported the strongest factory expansion since mid-2022.

The national PMI climbed to 53.3, and the New York Fed 's Empire State index showed a big jump in orders and investment plans. Companies reported new commitments to plants and equipment, pointing to a revival in domestic industry.

But government data for July told a slower story. Durable goods orders fell 2.8% overall, even though core business orders excluding aircraft rose 1.1%. Today's Chicago PMI dropped sharply to 41.5, deep in contraction territory.



The goods trade deficit also widened to $103.6 billion in July, the largest in months. The way to read this is simple: surveys measure expectations, while official statistics capture what has already happened.

Factories are preparing for more output, but the hard data shows production and trade have not yet caught up with that optimism. The labor market adds balance.

Jobless claims remain historically low, and employers are holding onto staff. But consumer sentiment, tracked by the University of Michigan , fell in August to 58.2, showing households are less confident even as they continue to spend.

The bigger picture is that America still outpaces its peers because services and household demand are carrying the economy. Manufacturing may be turning a corner, but its recovery is uneven.

Businesses abroad should see a U.S. economy that remains resilient but increasingly dependent on consumers, with factories still in the early stages of a rebound.

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