The news flow on the US economy resumes its positive trend.
The Conference Board's US leading index increased 0.1 percent to 138.2 in July, following a 1.2 percent increase in June. The index has increased 1.0 percent over the six months through July.
The Philadelphia Federal Reserve Business Outlook Survey showed that the region's manufacturing sector continued to expand in August. The diffusion index of current activity increased from 9.6 in July to 17.5 in August, its highest reading since April. The index for future activity increased from 15.3 in July to 33.4, its highest reading since December.
Less positively, initial claims for unemployment insurance last week was 316,000 according to Labor Department, an increase of 6,000 from the previous week's revised figure of 310,000. The 4-week moving average was 312,750, an increase of 2,750 from the previous week's revised average of 310,000.
Of course, things could get bad if the housing market deflates in a hurry, as this Reuters story warns.
The U.S. housing market may be starting to lose steam, experts say, with prices still rising but not at the skyrocketing rate to which sellers in hot markets have become accustomed. That means a shift in buyer behavior, some brokers said. This may be the first sign that either the booming U.S. housing market is a bubble ready to burst or it's a healthy economic cycle about to unwind fairly painlessly...
The situation might follow that in the UK, although things there actually appear less gloomy at the moment, as Reuters reports that retail sales fell less than expected in July.
The Office for National Statistics said on Thursday that sales fell by 0.3 percent last month, only partly reversing June's huge 1.2 percent jump and taking the annual rate up to 1.8 percent. Analysts had expected a fall of 0.6 percent. Quarterly growth in sales, meanwhile, moved up to its highest level since November and the ONS said the underlying trend was up... Shop prices were on average 0.6 percent lower than a year ago, the same as in June, suggesting that retailers are not cutting prices that aggressively despite complaining about tough trading conditions since the start of the year.
Mortgage lending in the UK was weaker in July, according to figures from the British Bankers' Association.
The BBA said underlying mortgage lending rose by 3.7 billion pounds last month. That was the weakest increase since December 2001 but economists said the figures still pointed to a gradual slowdown in the housing market.
Meanwhile, Eurostat reported yesterday that industrial production rose 0.3 percent in the euro-zone in June after falling 0.4 percent in May and increasing 0.8 percent in April. Output in the EU25 also rose 0.3 percent in June after falling 0.3 percent in May and rising 1.0 percent in April.
In another report released yesterday by Eurostat, euro-zone annual inflation was shown to have been 2.2 percent in July, up from 2.1 percent in June. Monthly inflation for July, however, was -0.1 percent. EU25 annual inflation was 2.1 percent in July 2005, up from 2.0 percent in June. Monthly inflation for July was -0.1 percent. Energy prices "saved" Europe from worse deflation in July. Excluding energy, euro-zone monthly inflation was -0.4 percent.
It was a similar story at the producer prices level, at least in Germany.
Prices at factory gates rose by 0.5 percent month-on-month, the Federal Statistics Office said. On the year, prices rose by 4.6 percent, the same rate as in June and April and equalling the highest rate of annual producer price inflation since April 2001... A breakdown of the data showed that electricity costs had risen by 4.4 percent on the month and by 11.5 percent on the year in July. Prices of mineral oil products increased by 2.4 percent from June and by 16.9 percent from July 2004... [C]ore producer prices inflation had softened further. Excluding energy, prices rose by 1.4 percent compared with July 2004, slower than June's ex-energy annual gain of 2.0 percent, the Statistics Office said.
The inflation data from Europe is a reminder that even as we worry about oil and inflation, deflation continues to lurk just around the corner.