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Consumer Spending in U.S. Advances for Fourth Consecutive Month

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retail sales

Consumer spending advanced for a fourth straight month in July, bolstered by stronger income gains, sending the biggest part of the U.S. economy to a solid third-quarter start, Commerce Department figures showed Monday in Washington.

Key Points

  • Purchases climbed 0.3 percent (matching median estimate) after 0.5 percent rise that was revised up
  • Incomes grew 0.4 percent (matching median forecast) following 0.3 percent advance that was also revised up
  • Saving rate increased to 5.7 percent from 5.5 percent
  • Disposable income adjusted for inflation climbed 0.4 percent, the most this year

Big Picture

The figures support economists’ projections that economic growth will rebound this quarter after the weakest first half since 2011. Adjusted for inflation, a 0.3 percent advance in July purchases followed an upwardly revised 0.4 percent gain in the previous month, indicating a better start to the third quarter. Ian Shepherdson at Pantheon Macroeconomics said in a note to clients that spending this quarter may rise 3 percent after a robust 4.4 percent second-quarter surge. A solid August jobs report would further boost expectations for Federal Reserve policy makers to raise interest rates as soon as next month.

Economist Takeaways

“The consumer is going to remain the main driver of growth,” said Richard Moody, chief economist at Regions Financial Corp. in Birmingham, Alabama, who correctly projected the rise in spending. “Continued improvement in the labor market is supporting income growth. It’s consistent with a solid third quarter.”

The Details

  • Disposable income, or the money left over after taxes, increased 0.4 percent after adjusting for inflation, the largest gain in 2016
  • Price gauge based on the personal consumption expenditures index — the Fed’s preferred measure — was unchanged from the prior month and was up 0.8 percent from year earlier
  • The core price measure, which excludes food and fuel, rose 1.6 percent for a fifth month on a year-over-year basis
  • Purchases of durable goods, which include automobiles, increased 1.9 percent in July after adjusting for inflation, the biggest gain in three months; spending on non-durable goods fell 0.1 percent, the first drop since February, while outlays on services rose 0.2 percent

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Crude Oil Dips Slightly on Friday Amid Demand Concerns

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Crude oil gains

On Friday, global crude oil prices experienced a slight dip, primarily attributed to mounting concerns surrounding demand despite signs of a tightening market.

Brent crude prices edged lower, nearing $83 per barrel, following a recent uptick of 1.6% over two consecutive sessions.

Similarly, West Texas Intermediate (WTI) crude hovered around $78 per barrel. Despite the dip, market indicators suggest a relatively robust market, with US crude inventories expanding less than anticipated in the previous week.

The oil market finds itself amidst a complex dynamic, balancing optimistic signals such as reduced OPEC+ output and heightened tensions in the Middle East against persistent worries about Chinese demand, particularly as the nation grapples with economic challenges.

This delicate equilibrium has led oil futures to mirror the oscillations of broader stock markets, underscoring the interconnectedness of global economic factors.

Analysts, including Michael Tran from RBC Capital Markets LLC, highlight the recurring theme of robust oil demand juxtaposed with concerning Chinese macroeconomic data, contributing to market volatility.

Also, recent attacks on commercial shipping in the Red Sea by Houthi militants have added a risk premium to oil futures, reflecting geopolitical uncertainties beyond immediate demand-supply dynamics.

While US crude inventories saw a slight rise, they remain below seasonal averages, indicating some resilience in the market despite prevailing uncertainties.

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Commodities

Nigeria’s Petrol Imports Decrease by 1 Billion Litres Following Subsidy Removal

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Ship Aveon Offshore

Nigeria’s monthly petrol imports declined by approximately 1 billion litres following the fuel subsidy removal by President Bola Ahmed Tinubu, the National Bureau of Statistics (NBS) reported.

The NBS findings illuminate the tangible effects of this policy shift on the country’s petroleum importation dynamics.

Prior to the subsidy removal, the NBS report delineated a consistent pattern of petrol imports with quantities ranging between 1.91 billion and 2.29 billion litres from March to May 2023.

However, in the aftermath of Tinubu’s decision, the nation witnessed a notable downturn in petrol imports, with figures plummeting to 1.64 billion litres in June, the first post-subsidy month.

This downward trend persisted in subsequent months, with July recording a further reduction to 1.45 billion litres and August witnessing a significant decline to 1.09 billion litres.

August’s import figures represented a decrease of over 1 billion litres compared to the corresponding period in 2022.

The NBS report underscores the pivotal role of the subsidy removal in reshaping Nigeria’s petrol import landscape with the Nigerian National Petroleum Company emerging as the sole importer of fuel in the current scenario.

Despite higher petrol imports in the first half of 2023 compared to the previous year, the decline in June, July, and August underscores the profound impact of subsidy removal on import dynamics, affirming the NBS’s latest findings.

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Crude Oil

Nigeria’s Oil Rig Count Soars From 11 to 30, Says NUPRC CEO

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The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, has announced a surge in the country’s oil rig count.

Komolafe disclosed that Nigeria’s oil rigs have escalated from 11 to 30, a substantial increase since 2011.

Attributing this surge to concerted efforts by NUPRC and other governmental stakeholders, Komolafe highlighted the importance of instilling confidence, certainty, and predictability in the oil and gas industry.

He explained the pivotal role of the recently implemented Petroleum Industry Act (PIA), which has spurred significant capital expenditure amounting to billions of dollars over the past two and a half years.

Speaking in Lagos after receiving The Sun Award, Komolafe underscored the effective discharge of NUPRC’s statutory mandate, which has contributed to the success stories witnessed in the sector.

The surge in Nigeria’s oil rig count signifies a tangible measure of vibrant activities within the upstream oil and gas sector, reflecting increased drilling activity and heightened industry dynamism.

Also, Komolafe noted that NUPRC has issued over 17 regulations aimed at enhancing certainty and predictability in industry operations, aligning with the objectives outlined in the PIA.

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