Strong housing, inflation and manufacturing data

Yesterday's news perhaps provide some justification for continued increases in interest rates worldwide.

The US housing market remains strong, according to the National Association of Realtors. Total existing-home sales increased 2.0 percent in August to a seasonally adjusted annual rate of 7.29 million from a pace of 7.15 million in July. The national median existing-home price for all housing types was $220,000 in August, up 15.8 percent from August 2004; this is the strongest rate of appreciation since July 1979.

In Germany, the inflation rate rose to its highest level in over four years in September. The consumer price index (CPI) rose by 2.5 percent on the year, the Federal Statistics Office said yesterday. This was the highest level since June 2001. Compared with August, prices rose by 0.4 percent. High oil prices and a hike in tobacco tax were mainly to blame for the rise.

And manufacturing continues to recover. In Japan, the business survey index of sentiment at large manufacturers rose to plus 6.4 in the July-September quarter from minus 2.4 in April-June, while the indices for their expectations for October-December and January-March were at plus 11.1 and plus 9.0 respectively. In Taiwan, manufacturing output grew 5.35 percent in August over a year earlier, while export orders rose 22.65 percent to US$22.151 billion, a record high. And in Singapore, manufacturing output rose 11.8 percent in August over a year earlier and 2.5 percent over the previous month.