USD
American consumers upped their purchasing in the fourth quarter, just as
companies hit the brakes. While the economy grew at a 2.6 percent annualised
rate, the gain fell short of the median forecasts and was well below the 5
percent pace in the third quarter.

Cheaper petrol prices and the largest employment increase since 1999 are
boosting household confidence, increasing the odds that consumer spending can

USD
American consumers upped their purchasing in the fourth quarter, just as
companies hit the brakes. While the economy grew at a 2.6 percent annualised
rate, the gain fell short of the median forecasts and was well below the 5
percent pace in the third quarter.

Cheaper petrol prices and the largest employment increase since 1999 are
boosting household confidence, increasing the odds that consumer spending can
sustain gains following its biggest advance in almost nine years. At the same
time, business investment is cooling as companies such as Caterpillar say
plunging oil prices, a rising dollar and slowing growth abroad hurt sales
globally.

Consumer spending, which accounts for almost 70 percent of the economy, climbed
at a 4.3 percent rate, more than projected and the biggest gain since the first
quarter of 2006. Households splurged on clothing, recreation and going out for
a spin in the car as sales of gasoline climbed even after taking into account
the drop in prices.

Another report showed American consumer confidence reached an 11-year high in
January as a strengthening jobs market and plunging gas prices kept households
looking on the bright side. The University of Michigan final consumer sentiment
index rose to 98.1, the highest since January 2004, from 93.6 in December.

However companies are not as enthusiastic. Business investment
increased at a 2.3 percent annualized rate in the fourth quarter, compared with
a 7.7 percent gain in the third quarter. Corporate spending on equipment
dropped at a 1.9 percent pace, the biggest decline since the second quarter of
2009. A widening trade deficit as imports climbed three times faster than
exports, and a slump in defence spending following a third-quarter surge, held
back growth last quarter, Friday’s report showed.

Federal Reserve policy makers are monitoring economic progress as they weigh
their first interest rate increase since 2006. In a statement following a
meeting this week, the central bank acknowledged global risks, saying that it
will take into account readings on “international developments” as it decides
how long to keep rates low. Federal Reserve Bank of St. Louis President
James Bullard said in an interview Friday in New York that investors are wrong
to expect the Fed to postpone an interest-rate increase beyond midyear, with
the U.S. economy leading global growth and unemployment dropping.

Key
Announcements:
GBP – 09:30 : UK manufacturing PMI (Jan) expected to be lower at 52.5
at 52.6
USD – 13:30 : ISM manufacturing PMI (Jan) expected to be lower at 54.5
from 55.5

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