Tom Moeller

large_172b5ede-4163-4780-954f-d3883d154e45_1220615v.jpg

medium_172b5ede-4163-4780-954f-d3883d154e45_1220615v.jpg

small_172b5ede-4163-4780-954f-d3883d154e45_1220615v.jpg

thumbnail_172b5ede-4163-4780-954f-d3883d154e45_1220615v.jpg

172b5ede-4163-4780-954f-d3883d154e45_1220615v.jpg

large_1f66d5a9-b50e-4cb3-806e-a101c2b45efb_1220615w.jpg

medium_1f66d5a9-b50e-4cb3-806e-a101c2b45efb_1220615w.jpg

small_1f66d5a9-b50e-4cb3-806e-a101c2b45efb_1220615w.jpg

thumbnail_1f66d5a9-b50e-4cb3-806e-a101c2b45efb_1220615w.jpg

1f66d5a9-b50e-4cb3-806e-a101c2b45efb_1220615w.jpg

At today's meeting of the Federal Open Market Committee (FOMC), the Fed announced a 75 basis point increase in the target for the Federal funds rate to 1.50% - 1.75%. It placed the rate at the highest level since March 2020. The move was greater-than-expected in the Action Economics Forecast Survey due to recent, strong inflation readings.

Fed Chairman Powell indicated that "today's 75 basis point increase is an unusually large one, and I do not expect moves of this size to be common..."

The statement accompanying today's action indicated that "Overall economic activity appears to have picked up after edging down in the first quarter. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures."

In addition, the Fed will continue reducing its portfolio of Treasury securities and agency debt and agency mortgage-backed securities.

Today's action was endorsed by all but one member of the FOMC, who voted for a 50 basis point increase.

The statement issued following today's meeting can be found [here](https://www.federalreserve.gov/newsevents/pressreleases/monetary20220615a.htm).

large_fe90f1f4-6824-4702-a44c-1f87f8bef445_1220615x.jpg

medium_fe90f1f4-6824-4702-a44c-1f87f8bef445_1220615x.jpg

small_fe90f1f4-6824-4702-a44c-1f87f8bef445_1220615x.jpg

thumbnail_fe90f1f4-6824-4702-a44c-1f87f8bef445_1220615x.jpg

fe90f1f4-6824-4702-a44c-1f87f8bef445_1220615x.jpg

large_c836378e-dfc7-4488-8e14-2d6cdc330289_1220615y.jpg

medium_c836378e-dfc7-4488-8e14-2d6cdc330289_1220615y.jpg

small_c836378e-dfc7-4488-8e14-2d6cdc330289_1220615y.jpg

thumbnail_c836378e-dfc7-4488-8e14-2d6cdc330289_1220615y.jpg

c836378e-dfc7-4488-8e14-2d6cdc330289_1220615y.jpg

FOMC Increases Funds Rate, Raises Inflation & Lowers GDP Projections

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

A premier time series data platform for the global strategy, research, and quant communities. 

New York

London

Singapore

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

241202J4.jpg

241202K4.jpg

The ISM Purchasing Managers Index of activity in the manufacturing sector rose to 48.4 during November from 46.5 in October and 47.2 in September. It was the highest level since June, though still below the break-even level of 50.3 reached in March. A level of 47.5 for November had been expected by the Action Economics Forecast Survey.

Performance of the component indexes was mixed last month. The new orders measure rose to 50.4 from 47.1. It was the highest level since March. Twenty-one percent (NSA) of survey respondents reported higher new orders while 24.7% reported declines. The employment index increased to 48.1 from 44.4. It stood at a five-month high as 14.2% indicated job gains and 20.5% reported declines. The inventories reading improved to 48.1 from 42.6 in October. Sixteen percent of respondents raised inventory levels while 21.3% lowered them. The production index edged up to 46.8 after declining to 46.2 in October. It remained below the high of 54.6 in March. Sixteen percent of respondents reported higher production while 20.9% reported declines. Working lower, the supplier delivery index weakened to 48.7 last month from 52.0 during October. Six percent of respondents reported slower delivery speeds and 8.3% reported a speed-up.

The prices index, which is not part of the composite series, fell to 50.3 (NSA) from 54.8 in October. A lessened 12.2% of respondents reported higher prices last month while an increased 11.7% reported lower prices.

In other series, the export order index rose to 48.7 in November from 45.5 in October, but remained down from a March high of 51.6. The imports index fell to 47.6 last month from 48.3, below a March high of 53.0, while the order backlog index declined to 41.8, a four-month low.

The ISM figures are based on responses from over 400 purchasing executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These indexes are diffusion indexes where a reading above 50 indicates expansion and a reading below 50 points to contraction. The figures from the Institute for Supply Management can be found in Haver’s **USECON** database; further detail is found in the **SURVEYS** database. The expectations number is available in Haver’s **AS1REPNA** database.

241202L4.jpg

241202M4.jpg

- Surprising strength moves index to highest level since June.
- New orders, employment & inventories lead improvement.
- Prices index backpedals.


U.S. ISM Manufacturing Index Increases in November

Winnie Tapasanun

241202N.jpg

241202O.jpg

The value of construction put in place rose a slightly more-than-expected 0.4% m/m in October on top of a 0.1% increase in September (unrevised) and an upwardly revised 0.9% gain in August (+0.1% previously), data from the U.S. Census Bureau showed. The October reading was the third consecutive m/m rise following a 0.04% July downtick and a 1.1% June drop. A 0.3% m/m October increase had been expected in the Action Economics Forecast Survey. The year-on-year rate decelerated to 5.0% in October from 5.3% in September, registering the lowest y/y pace since May 2023’s 4.2%. The latest y/y figure was lower than 8.6% in October 2023, having remained below its recent high of 9.8% in January 2024 and a peak of 18.6% in April 2022.

Private construction increased 0.7% (5.1% y/y) in October following a 0.2% decline in September (+0.03% initially) and a 1.0% increase in August (+0.2% previously). Residential private construction rebounded 1.5% (6.4% y/y) in October, up for the second month in three, following a 0.4% decline in September (+0.2% initially). Home improvement building recovered 2.7% (18.5% y/y), the third m/m gain in four months, following a 1.4% September drop; it was 41.2% of the residential private construction. Single-family building advanced 0.8% (1.3% y/y) after a 0.6% September rebound; it was 45.4% of the residential private construction. Multi-family building grew 0.2% (-6.8% y/y) in October, the first m/m gain since November 2023, reversing a 0.2% decline in September; it was 13.4% of the residential private construction.

Nonresidential private construction fell 0.3% (+3.5% y/y) in October, the first m/m fall since July, following a 0.05% uptick in September (-0.1% initially). The October fall reflected m/m drops in the following nonresidential private constructions. These included health care (-1.4%; -0.1% y/y), educational (-1.3%; +2.9% y/y), amusement & recreation (-1.2%; -0.4% y/y), commercial (-1.1%; -11.2% y/y), and lodging (-0.4%; -7.1% y/y). In contrast, the following private constructions rose m/m in October: religious (4.0%; 0.3% y/y), office (0.5%; 0.4% y/y), utilities (0.2%; 5.3% y/y), and transportation (0.1%; 10.1% y/y). Meanwhile, manufacturing private construction (-0.03%; +16.3% y/y) and communication private construction (+0.01%; -3.0% y/y) were virtually unchanged m/m in October.

The value of public construction dropped 0.5% (+4.5% y/y) in October after upwardly revised rises of 1.1% in September (+0.5% initially) and 0.4% in August (+0.04% previously), reflecting declines of 0.5% (+6.4% y/y) in residential public construction and 0.5% (+4.5% y/y) in nonresidential public construction. The October fall reflected m/m drops in the following nonresidential public constructions. These included conservation & development (-3.3%; -10.6% y/y), sewage & waste disposal (-1.5%; +6.1% y/y), utilities (-1.5%; +2.9% y/y), water supply (-0.6%; +17.1% y/y), educational (-0.4%; +0.6% y/y), health care (-0.3%; +8.7% y/y), and transportation (-0.1%; +5.4% y/y). Notably, spending on highways & streets, which made up 28.4% of public construction spending, slid 0.7% (-1.2% y/y) in October, the fist m/m slide in three months, following a 0.9% increase in September. To the upside, the following public constructions rose m/m in October: office (2.0%; 10.3% y/y), public safety (1.1%; 21.4% y/y), amusement & recreation (0.9%; 20.7% y/y), and commercial (0.7%; 34.3% y/y).

The construction figures can be found in Haver's **USECON** database. The expectations figure is from the Action Economics Forecast Survey in **AS1REPNA**.

241202P.jpg

241202Q.jpg

- October construction spending +0.4% m/m; +5.0% y/y, the lowest y/y rate since May ’23.
- Residential private construction +1.5% m/m, led by a 2.7% rebound in home improvement building.
- Nonresidential private construction -0.3% m/m, the first monthly decline since July.
- Public sector construction -0.5% m/m, reflecting drops in both residential & nonresidential public buildings.

U.S. Construction Spending Rises for the Third Consecutive Month in October

Tian Yong Woon

In this week’s letter, we look back at and review some of the key trends that have shaped the outlook for Asia this year. While growth picked up in several parts of the region earlier in the year, signs of a slowdown have emerged as we head toward year-end (Chart 1). Disinflationary trends have continued in many economies, welcome news for central banks across the region. However, the growth and inflation landscape remains uneven. Economies like Japan and India have experienced slower growth, while others such as Singapore, Taiwan, Malaysia, and Vietnam have seen improvements, in part driven by strong demand for electronics and semiconductors (Chart 2).

On monetary policy, the anticipated regional alignment with the Fed's easing cycle has not fully materialized. Instead, many central banks in Asia have opted to keep policy rates higher for longer, thanks to the influence of various domestic factors (Chart 3). Touching on semiconductors, key players like Taiwan and South Korea have reaped significant benefits from the AI-driven surge in demand, while China’s pre-emptive purchases of semiconductor equipment have finally started to taper off (Chart 4). Turning to financial markets, Asian equities largely tracked their US counterparts through early October. However, market expectations were disappointed by China’s underwhelming stimulus plans, triggering sell-offs across regional markets, while US equities maintained a broader upward trend (Chart 5).

Lastly, in the political arena, both India and Japan saw their incumbent governments retain power, although with notable losses in parliamentary seats, raising some concerns over future economic policy direction (Chart 6). And as we head into December, uncertainty remains—particularly following President-elect Trump’s recent victory in November. We will continue to explore these developments and their potential impact for 2025 in next week’s publication.

**Growth and inflation**
Asia-Pacific economies had plenty to celebrate this year, as growth strengthened on average while inflation remained well-behaved in many economies. As shown in Chart 1, GDP growth rates rose from the lows of 2023, averaging just under 4% y/y in both Q1 and Q2. That said, while growth momentum persisted in some economies during Q3, it slowed further in many others. Meanwhile, the region experienced further disinflation, with average CPI inflation falling from a peak of 2.9% y/y in May to just 2% in October—a level at which many central banks would likely feel comfortable. However, a deeper dive into economy-specific nuances reveals disparities in the relationship between growth and inflation across the region's economies—an issue we will explore in the next section.

241202T1.jpg

A closer look at economy-specific developments, as shown in Chart 2, reveals a divergent picture of growth and inflation across Asia-Pacific economies. Starting with growth, economies like Singapore, Taiwan, Malaysia, and Vietnam have seen their growth momentum strengthen in recent quarters. In contrast, economies such as India and Japan have experienced a slowdown in real GDP growth. Singapore’s growth exceeded expectations in Q3, driven by strong demand for electronics and semiconductor-related products—a trend also observed in Taiwan, Malaysia, and Vietnam. As for the slower-growing economies, not all is bleak. India’s Q3 slowdown may have been partly influenced by its ongoing elections. However, Japan continues to face challenges in generating growth drivers. On inflation, the picture is similarly nuanced across the region. While economies like China and Thailand are experiencing relatively low inflation, others, including India and Vietnam, are still grappling with relatively high consumer price increases. 

241202T2.jpg

**Monetary Policy**
Turning to monetary policy, we have yet to see a widespread shift toward monetary easing in Asia-Pacific economies, despite the Fed beginning its own easing cycle. As a result, the region's average policy rate has only declined slightly, in contrast to the Fed's more significant rate cuts (Chart 3). This runs counter to expectations heading into the year, when many economists anticipated rate cuts in Asia in tandem with the Fed. However, country-specific factors—such as high household debt, rapid property price inflation, and sticky inflation—have led to a "tighter-for-longer" stance rather than rate cuts. Nonetheless, rate cuts have already been implemented in Indonesia, the Philippines, New Zealand, South Korea, and Thailand. Looking ahead, as discussed in our previous publications, Asian central banks may have less scope to ease, especially since the US Fed may not need to cut rates as aggressively as once expected, due to the reflationary impact from some of Trump's proposed fiscal measures.

241202T3.jpg

**Semiconductors and AI**
Next, we take a closer look at the substantial dividends reaped by certain Asian economies from the AI-driven semiconductor boom. Taiwan and South Korea are among the biggest beneficiaries of this year’s surge in AI demand, as both are key players in the semiconductor industry. South Korea, for instance, continues to see export growth in semiconductors in the high double digits, though the pace has slowed recently (Chart 4). In contrast, Taiwan has experienced a pickup in growth in recent months. On the import side, China’s growth in semiconductor manufacturing equipment imports peaked at 153% y/y in December 2023. This surge was likely driven by concerns over US semiconductor-related controls at that time. However, import growth has slowed considerably this year, and even entered contractionary territory in September.

241202T4.jpg

**Financial markets**
Turning to financial market developments, Chart 5 shows that while regional equities posted solid total returns earlier this year, their performance was disrupted in October. This downturn was partly driven by Chinese equities, which suffered significant declines after market expectations for stimulus from Chinese authorities fell short. Meanwhile, US equities continued to perform strongly, taking a substantial lead over their Asian counterparts. On the currency front, Asia-Pacific currencies have had a volatile ride against the US dollar. On average, however, they have experienced net depreciation, with the Malaysian ringgit being the only exception, posting a clear net appreciation so far this year. Recent drivers of dollar strength, and thus Asian currency weakness, include expectations of a higher Fed terminal rate in its current easing cycle.

241202T5.jpg

**Political developments**
Lastly, we review the key political developments in Asia this year, of which there were many. First, India held its general elections in the first half of the year, where Prime Minister Modi retained his position. However, his party, the BJP, lost its parliamentary majority, leading to a sense of policy uncertainty (Chart 6). A similar situation unfolded in Japan, where Prime Minister Ishiba’s party, the LDP, also lost its parliamentary majority in the October elections. Elsewhere, Indonesia held its general elections, and new President Prabowo was sworn in earlier in October, with observers closely watching his ambitious spending plans. In Thailand, a leadership change occurred when former Prime Minister Srettha was removed from office for constitutional violations. Despite this, key policy initiatives, such as the massive digital wallet scheme, continued under the leadership of current Prime Minister Paetongtarn.

241202T6.jpg

Asia

Economic Letter From Asia: The Year in Review

Andrew Cates

**The Trump Trade versus global growth surprises**
Expectations of policies aimed at boosting US growth, including proposed tax cuts and deregulation, have fuelled the so-called "Trump trade" in recent weeks. One clear manifestation of this has been the rise in US Treasury yields, driven by investors' heightened expectations for stronger domestic growth and higher inflation in the months ahead. Interestingly, these trades have unfolded alongside positive surprises in US and broader global growth data, further reinforcing market sentiment. However, as chart 1 below illustrates, the tide may have begun to shift. Recent global data releases have broadly disappointed expectations, primarily due to weaker-than-anticipated survey data from Europe. This has raised questions about the sustainability of a bullish outlook for global growth. Notably, the pullback in US Treasury yields coincides with these weaker global data points—a reflection perhaps of investors recalibrating their optimism toward the world economy.

112824 US 10 yr and surprises.jpg

**The Fed’s balance sheet and global uncertainty**
That retracement in yields serves as a reminder of the interconnected nature of global markets. While US growth remains a key driver of optimism, the broader international backdrop will continue to influence market dynamics and investor sentiment in the weeks ahead. Broadly-based supply-side factors - such as climate change, the energy transition, geopolitical tensions, and heightened trade protectionism - have left uncertainty about the global economic outlook at structurally high levels. This continues to have ramifications for global imbalances, for the demand for US financial assets (including US Treasuries) as well as for Fed’s stewardship of the global financial system.

112824 US BS and uncertainty.jpg

**The global monetary policy consensus**
The December edition of the Blue Chip Financial Forecasts survey, published this week, echoed many of the observations above. The BCFF panel, for example, are expecting that the US election results will slow the pace of FFR cuts going forward. Forecasters are still fully expecting a 25bps cut at the December FOMC meeting but for 2025, the BCFF consensus now looks for 103bps of cuts versus 126bps of cuts in the November survey. This contrasts Europe where 84% of the panel do not believe that likely US policy changes will slow the pace of policy rate reductions from the ECB in the year ahead. The consensus specifically now looks for 114 bps of ECB cuts over the next 12 months and 100 bps from the BoE.

112824 BCFF policy.jpg

**Relative demand matters**
The scope for easing from the ECB relative to the Fed lies in part in lingering structural fault lines that bedevil the outlook for Europe’s economies. Chart 4 below chart underscores the longer-term divergence in domestic demand dynamics between the US and other major economies, including Japan. To put some numbers on this, domestic demand volume in 2024 Q3 in the US was 42% higher than its level in 2010. That stands in contrasts with the UK where domestic demand was only 25% higher than its 2010 level. And it stands in even starker contrast with the euro area and Japan where domestic demand was respectively only 14% higher (in Q2) and 10% higher (in Q3). This underscores the structural differences between the US and other major economies and concerns, among other factors, about institutional flexibility, financing flexibility, demographics and broader productivity potential.

112824 Domestic demand.jpg

**EM portfolio flows**
As for China, concerns about the economic outlook have also intensified of late largely thanks to the specific trade policy intentions of a new US administration. Chart 5 below underscores the continued sensitivity of emerging markets more generally to global macroeconomic and geopolitical developments. Having been buoyed by news of policy stimulus from China in September, emerging markets saw an exodus of equity capital in October. Disappointments about the scale and scope of that stimulus coupled with heightened uncertainty about US trade policy were probably the key reasons for this.

112824 Portfolio flows.jpg

**The global energy transition**
Finally we turn this week to broader structural challenges from climate change and the energy transition. Chart 6 below provides a snapshot of the relationship between electricity generation, its carbon intensity, and the price of electricity across countries. The x-axis represents the share of low-carbon electricity generated, while the y-axis measures per capita electricity generation. Bubble sizes denote the relative cost of electricity, with larger bubbles indicating higher electricity prices. Canada stand outs with high per capita electricity generation and a large share of low-carbon electricity (nearly 100%), yet with electricity prices that remain relatively low. This is likely due to the abundance of hydropower, a low-cost, low-carbon energy source. Germany, France, Italy and the UK, in the meantime, while achieving significant shares of low-carbon electricity generation, exhibit some of the largest bubble sizes, reflecting high electricity prices. Germany's reliance on renewable energy subsidies and grid costs contribute to these elevated prices. At the lower end, India combines low per capita electricity generation and a small share of low-carbon energy, indicative of a fossil fuel-reliant grid. Electricity prices here remain low likely reflecting limited access to energy-intensive infrastructure.

112824 Electricity gen and prices.jpg

A holiday-shortened trading week in the US, combined with persistent political uncertainties on both sides of the Atlantic, have kept financial markets relatively subdued in recent days. Latest data releases have generally supported the prevailing view that US economic growth will remain resilient in the near term, although this strength could come at a cost for the global economy (charts 1 and 2). The Fed's approach to calibrating monetary policy in this environment remains a key area of debate, particularly given the significant role of global factors—such as capital flows—in shaping financial stability (chart 3). Europe, meanwhile, finds itself at the eye of the storm, with political gridlock in Germany and France compounding concerns about the region's economic outlook. In the UK, recent budgetary measures that raised the corporate tax burden have further clouded the picture, sparking worries about their impact on business sentiment and investment. These dynamics risk stalling much-needed structural reforms across Europe, potentially exacerbating global imbalances and widening growth disparities with the US (chart 4). Elsewhere, fears over China’s economic outlook and the trajectory of broader emerging markets have intensified amid speculation over shifts in US trade policy (chart 5). At the same time, climate change and the energy transition remain high on the agenda, with the possibility of significant policy changes in the US adding to the uncertainty (chart 6).

FOMC Increases Funds Rate, Raises Inflation & Lowers GDP Projections

Tom Moeller

More Economy in Brief

U.S. ISM Manufacturing Index Increases in November

U.S. Construction Spending Rises for the Third Consecutive Month in October

Economic Letter From Asia: The Year in Review

Charts of the Week: Treading Water