“U.S. GDP grew 3.1% in Q3 2024, driven by consumer spending and exports. Jobless claims fell to 220k, but manufacturing contraction signals economic risks.”, — write: www.fxempire.com
Despite strong hiring, wage inflation appears controlled, with firms maintaining stable labor utilization. This labor market stability, coupled with mild wage pressures, suggests limited immediate concerns for the Fed.
Market Impact: The robust labor market supports consumer confidence, which may boost equities and dampen demand for safe-haven assets like gold.
Is Manufacturing Weakness a Warning Sign? The December Manufacturing Business Outlook Survey revealed a significant contraction in manufacturing activity, with the general activity index falling to -16.4, its weakest since April 2023. Indicators for new orders and shipments turned negative, and firms reported a notable reduction in production expectations for Q4 2024. While input prices rose, output price growth slowed, reflecting profit margin pressures.
Capacity utilization and labor constraints remain persistent issues, with firms highlighting supply chain bottlenecks. However, future activity expectations, while softening, remain optimistic, indicating anticipated recovery over the next six months.