After a blockbuster start to the year, a number of US data points have disappointed in the past month.
Some potential excuses:
- Later tax refunds this year
- Cool spring weather
- Sequestration
You can strike the last one off the list, according to ISM non-manufacturing survey Chairman Nieves. He says not many survey comments are about sequestration and many have to do with business activity.
Overall, the comments are generally upbeat in the report.
“Economy and all of our business units appear to be on track for positive gains this year. It may be a struggle, but economic indicators and signs of business growth point to increased spending from our customers.” (Professional, Scientific & Technical Services)
There is lots of chatter in the market about false starts in the US economy early in the year as a recurring pattern and traders not wanting to get burned again. At the moment, that’s looking like a real risk but upcoming data will be crucial.
The thing is, sequestration is now starting to kick in so it could be adding a headwind at a vulnerable time.
