The Market Insights team sifted through hundreds of statistical tests to identify these factors. This new series will illustrate what the indicators are telling us about the health of the US economy.
There are some initial signs in the data that show the economic situation may be beginning to stabilise or even improve. Below, Ambrose Crofton, Market Analyst at J.P. Morgan Asset Management provides further context:
“The weakness remains most pronounced in the more trade-dependent manufacturing sector – the epicentre of the slowdown in the economy where trade uncertainty has paralysed investment decisions. But in October there were signs of stabilisation in the Institute for Supply Management’s (ISM) manufacturing survey, which rebounded 1.8 points to 49.1. The announcement of a potential phase one trade deal between the US and China could serve to help stabilise activity in the manufacturing sector in the coming months. The services side of the economy also improved in October, with the ISM non-manufacturing survey rebounding strongly, rising 2.1 points to 54.7.
“The labour market still looks healthy, albeit employment (non-farm payrolls) is growing at a slowing rate – on average, 160,000 jobs have been added each month this year, compared to 220,000 per month in 2018. The current trend pace of employment growth is still some way from a level of 100,000, which would be more concerning. Consumers’ assessment of the current economic environment hasn’t changed since a year ago, suggesting a softening in the consumer outlook. But we take some comfort from the fact that the indicator has also not moved negative.
“The most supportive indicator of our health monitor continues to be the Leading Credit Index. In October the US Federal Reserve (Fed) cut interest rates 25 basis points for a third time this year and this should continue to support lending conditions in the US. The Fed also announced it would be pausing on future interest rate cuts and the improvement in recent economic data vindicates this decision.
“Overall, it may be too soon to argue that the US economy has completely turned a corner, but positive developments around trade, continued monetary policy accommodation, and improvements in the economic data suggest that this is an economy that is slowing but not stalling.”
Download the full report here: JP Morgan US Economic Health Monitor chart book – November 2019