Key US Economic Data Update - July 2013

Key data released during the month of July 2013 indicate encouraging signs of economic recovery for the United States. In this post, we take a look at key economic data as of end July 2013 in an attempt to gauge where the US economy is currently heading.

Economic Data:

1) US Purchasing Managers Index

• Benchmark : Value above 50.00 indicate positive manufacturing growth
• US PMI data as of 31 July 2013 : 55.40
• Additional Information : The PMI data for 31st July 2013 increased by 4.50 (+8.84%) in comparison to PMI data of 50.90 for 30th June 2013
• Current Outlook : Positive

2) US Unemployment Rate

• Benchmark : 
• Highest Unemployment Rate Recorded over 10 years : 10% in Oct 2009
• Lowest Unemployment Rate Recorded over 10 years : 4.4% in May 2007
• 2008 Global Financial Crisis was forewarned when Unemployment Rate spiked from 5.0% in April 2008 to 5.4% in May 2008
• Unemployment Rate for July 2013 : 7.4%
• Additional Information : The US Unemployment Rate is undergoing a recovery period. Investors to be wary when the Unemployment Rate touches the 5.0% and below range.
• Current Outlook : Positive

3) US Treasuries Yield Curve

• Benchmark :
• Positive Yield Curve indicate economic recovery
• Flat Yield Curve indicate slow economic growth
• Negative Yield Curve indicate impending economic recession
• US Treasuries Yield Curve as of 31st July 2013 : Positive Yield Curve with Low Interest Rate
• Current Outlook : Positive

Current Malaysia Outlook

Based on the key economic data for July 2013, the US economy is undergoing a recovery stage and I strongly believe that there is still time for the equity/stock market to continue its bullish trend. The Dow Jones buoyed by the positive economic data managed to gain 3.5% for the month of July 2013 alone.

Dow Jones

While majority of indices tend to mirror the gains of the Dow Jones, the same can't be said for our Kuala Lumpur Composite Index. The KLCI shed 0.14% for the month of July 2013 which I believe largely due to profit taking by foreign investors whom are redirecting their investment back to United States. 

KLCI

Never the less, I believe that positive signs of growth of the largest economy will spillover to our local stock market. Barring local issues such as the upcomming UMNO Election and 2014 Budget Announcement, the KLCI should continue to experience bullish gain as long as the economic outlook of the United States remain positive.

Summary
Investors tend to monitor key economic data in order to detect early signs of possible changes to the stock market trend. For "Lump Sum" investors, key economic data is used as a guiding principal for entering and exiting the stock market or unit trust. On the other hand, "Dollar Cost Averaging" investors benefit by using economic data to predict the end of a bear market. The end of a bear market is a suitable time for "Dollar Cost Averaging" investors to purchase stocks or unit trust at low prices.

Cheers and Happy Investing!

P.s : If you are looking for a passive long term investment specifically unit trust, feel free to contact me at shanesee03@gmail.com

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