US gross domestic product (GDP) growth in the second quarter of 2014 expanded 4 percent year-on-year (yoy), thus having nearly doubled from the GDP growth pace in the first quarter (2.1 percent yoy) when the USA was hit by severe winter weather. The US economic growth pace in Q2-2014 also exceeded analysts' forecasts who expected US GDP growth to range between 2 and 2.5 percent. Strong growth was caused by improved US consumer spending (expanding 2.5 percent and contributing over two-thirds to total economic activity in the USA).
American consumers bought more durable manufacturing products and services in the second quarter of 2014. Meanwhile, US private companies were reported to have added 281,000 jobs in July 2014, thus having slowed from the 281,000 jobs figure in the previous month but remained at a healthy level. In the past five months, US private companies have added more than 200,000 jobs per month. The US Federal Reserve is still concerned about the level of US unemployment and is expected to maintain low interest rates for a ‘considerable time’ after the bond-buying program (quantitative easing) has ended. This program is expected to be fully wound down by November 2014.
Amid an improving US economy, the US dollar posted its biggest monthly gain against the euro since February 2014 as traders are anticipating higher interest rates (long-term US bond yields rebounded increasing the momentum for US dollar purchases).
On Thursday (31/07), Asian stocks generally rose as a result of the US GDP growth pace in Q2-2014.
Meanwhile, stock and financial markets are still closed in Indonesia due to the Idul Fitri holiday. The larger cities, particularly the capital city of Jakarta, have become empty as people conducted the mudik. However, starting from today (13/07), people are expected to return to the cities.