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US Redbook Numbers Improve

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US Redbook Numbers Improve

This week’s Johnson Redbook Index in the US has shown no change on the week posting -0.5% against a previous of -0.5% in the month on month number. The year on year figure however improved a little to 2.9% from 2.3% as reported last week. The Redbook Index captures Retail Sales Information and as such provides a good but very short-term guide to domestic economic activity in the world’s largest economy.

As the harsh winter turns to spring all evidence is that the US recovery is beginning to get back on track. Last Friday’s Nonfarm payrolls indicated that 192k new jobs were added to the economy in March this missed the economists expectations of 200k but markets took the news well particularly as the January and February numbers also underwent positive revisions totaling 37k extra jobs.

It is now becoming evident that coldest start to the calendar year that the US has experienced on over two decades did in fact contribute meaningfully to the sluggish first economic quarter.

Tomorrow sees the publication of the minutes of the Federal Reserves Open Market Committee meeting that took place in late March. Key to watch will be the Fed’s reaction to the improving economic conditions particularly now that hindsight will enable them to discount the poor Q1 data on account of the weather.

Secondly the improving jobs situation will no doubt have been the subject of discussion and any insight into how much credence the Fed is giving to this will be welcomed by the markets. This is of even more interest now that FOMC members have begun to talk openly about their concerns around the structure and make up of the jobs recovery.

We have been told that despite the obvious economic pick up that the Fed intends to remain ‘accommodative’ on monetary policy, the final item to attempt to discern from the Fed meeting minutes will be a definition of the word ‘accommodative’ in terms of magnitude and particularly timescale.

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