The following economic update by Stanlib economist Kevin Lings shows that the US appears to be turning the corner. This is good news for global growth but unfortunately South Africa remains well behind the curve; latest statistics on our economy are not as heartening.

In the past few weeks, key US economic data has remained relatively encouraging despite the difficulties with resolving the tax component of the Fiscal Cliff at the end of 2012 as well as concerns about the need to raise the Debt Ceiling within the coming weeks. The following is a very brief catch-up on some of the key US data that has been published since late last year.

US retail sales beat market expectations in December 2012. Although the core or underlying level of US retail sales lost some momentum during 2012, activity levels held-up relatively well, helped by the ongoing (albeit modest) gains in employment and income.

US consumer and producer inflation has remained well under control. Consumer inflation fell further in December to 1.7%y/y, while core inflation has been stable at 1.9% to 2% for the past five months. Currently there is probably more concern about deflation than inflation despite the massive increase in liquidity from the Fed.

US employment has continued to increase at a steady pace, with a gain of 155 000 non-farm jobs in December. This was largely in-line with expectations. Over the past six-months, the US has added an average of 160 000 a month. The ADP report for December reflected a better than expected gain of 212 000. It is encouraging to see that weekly initial jobless claims have remained below 400 000 for the past eight consecutive weeks and fell to a very encouraging 335 000 last week.

US vehicle sales have continued to impress, rising convincingly in both November and December. Sales are still well below the pre-crisis peak, but the recovery has been solid.

The ISM manufacturing index moved back above 50 in December, but remains subdued overall. More encouragingly, manufacturing production surprised on the upside in December while capacity utilisation continued to trend higher. The overall level of US industrial production is almost back to the pre-crisis peak.

US house prices have risen for nine consecutive months, with another solid increase in October 2012. The housing market continues to recovery, albeit at a modest pace. Amazingly, housing starts for multi-family homes is now back to pre-crisis levels.

Consumer confidence fell back in December to 65.1 from 71.5 in November. This probably reflects some concerns about the Fiscal Cliff. Overall US consumer confidence has been trending higher (albeit somewhat unconvincingly) but remains well below the long-term average level of confidence in the US, which is around 94.

Personal income rose more than expected in November, up 0.6%m/m versus an expected gain of 0.3%m/m. Overall, though, the growth in personal income has been tepid for some time. In addition, the 2% increase in US payroll tax at the start of 2013 coupled with a rise in taxes for people earning above $400 000 will restrict the growth in personal income during the early part of the year. This should reflect in weaker consumer activity levels in Q1 2013. Encouragingly, US personal savings is currently up at 3.6% of disposable income, which should provide some downward protection in the near-term.

The Chicago Federal Reserve National Activity Index rose back above zero in November 2012, although the key 3-month moving average is still below zero at -0.2. The Chicago Activity Index is compiled on a monthly basis using a weighted average of around 85 indicators of national economic activity in the US. A level below -0.7 signals recession

US durable goods orders far exceeded expectations in November. Overall, the durable goods data suggests that US companies have been holding back spending on machinery and equipment as well as fixed investment generally. This probably reflects their concerns about the general state of the economy and the pace of the economic recovery. Given the strength of company balance sheets, businesses could be tempted to upgrade equipment should the economic recovery become more convincing.

US GDP is forecast to grow at 2.0% in 2012 (Bloomberg consensus compiled in January 2013), after expanding by 2.3% in 2012. First half of 2013 expected to be weaker than second half. Out of the 96 GDP growth forecasts for 2013 on Bloomberg, the highest is a growth estimate of 3.5% and the lowest is 1.0%. This is an especially large range at the start of the year, reflecting the prolonged high level of uncertainty especially around the impact of fiscal austerity.