Positive US data gives Fed more food for thought

Julian Harris
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SEVERAL positive reports on the health of the US economy provided a rosy backdrop to the start of the Federal Reserve’s latest policy meeting yesterday.

The Fed will announce tonight whether its Federal Open Market Committee (FOMC) is to deliver even greater stimulus measures to try to kick start the US recovery.

Worrying economic data has recently led some analysts to suggest that more quantitative easing (QE3) could be in the pipeline, but yesterday’s figures painted a more optimistic picture.

A measure of consumer confidence in the US, recorded by the Conference Board, bounced back to an index score of 65.9 for July, up from 62.7 in June. The result surprised many economists, who had anticipated a decline.

A Chicago purchasing managers’ index, often used as a bellwether of US-wide manufacturing conditions, climbed to 53.7 for July, up from 52.9 in June. Scores above 50 indicate economic growth.

And the latest S&P/Case-Shiller survey showed single-family home prices rising for the fourth month in a row in May.

Commerce Department data revealed a 0.5 per cent lift in household income in June, yet spending fell in real terms.