The rise in the ISM manufacturing index in February suggests that the factory sector is experiencing a resurgence after the weakness over the past couple of years. It also suggests that GDP growth is set to pick up in the first quarter. Unfortunately, other incoming data for January is much less upbeat, with real consumption falling by 0.3% m/m and nominal construction spending dropping by 1.0% m/m. On balance, we forecast that first-quarter GDP growth will be between 2.0% and 2.5% annualised.
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