Wednesday, 30 November 2005

Housing and consumer indicators show resilience

Perhaps the US housing market isn't cooling after all. Reuters reports the latest new home sales figures:

The Commerce Department reported that new home sales rose 13 percent in October to a record 1.424 million annual rate, apparently contradicting other signs that the U.S. housing market may be coming off the boil...

But the report also showed that home prices were not rising at quite the same pace -- up 1.6 percent -- and the number of homes still on the market reached a record 496,000. well as consumer confidence:

The Conference Board said its November index of consumer confidence rose to 98.9 from an upwardly revised 85.2 in October, beating Wall Street forecasts of a rise to 90.0.

...durable goods orders:

A government report earlier showed new orders for durable goods -- expensive items intended to last three years or more -- rose 3.4 percent in October, outstripping forecasts of a rise of 1.1 percent... September durable goods orders were revised upward to show a 2.0 percent decline, from a 2.4 percent fall.

October orders outside the transportation sector rose just 0.3 percent, falling short of forecasts of a 1.0 percent increase. Non-defense capital goods orders excluding aircraft, seen as an proxy for business spending plans, rose 1.3 percent.

...and chain store sales:

The International Council of Shopping Centers and UBS said in a joint report that retail sales grew 5.1 percent in the week ended November 26 compared with the same week a year earlier. It was the strongest year-over-year performance since June 12, 2004. But they were down 0.7 percent compared with the previous week.

A separate report by independent firm Redbook Research showed sales in November were up 0.3 percent from the same period in October and gained 4.4 percent on a year-over-year basis for the week.

If the trend in the US housing market isn't too clear, the same could be said of that in the UK, where house prices were flat in November:

House prices stagnated in November, dragging down the annual rate of increase, the Nationwide building society said on Tuesday in further evidence the property market remains broadly flat.

The mortgage lender said seasonally adjusted house prices were unchanged after jumping 1.3 percent in October...

The annual rate of house price inflation slipped back to 2.4 percent after picking up to 3.3 percent in October -- a rise that both the Nationwide and analysts concluded was temporary.

...even as mortgage approvals rose to their highest level in almost a year and a half in October.

Official data showed the number of loans agreed for house purchase, widely viewed as a good indicator of house prices six months out, rose to 113,000 in October from an upwardly revised 108,000 the month before. That was the highest since May 2004...

There was a stronger than expected pick-up in mortgage lending growth to 7.634 billion pounds in October compared to 7.505 billion pounds the month before and the highest since May...

[C]onsumer credit figures...showed the annual growth rate of unsecured borrowing was at its slowest in over a decade. Consumer credit grew by a slightly smaller amount than forecast for October to be up 1.273 billion pounds after 1.211 billion pounds the month before.

Meanwhile, a press release from the ECB showed that the rate of growth of credit in the euro-zone increased in October even as the rate of growth of M3 slowed.

The annual rate of growth of M3 decreased to 8.0% in October 2005, from 8.4% in September 2005... Regarding the main components of M3, the annual rate of growth of M1 was 11.2% in October 2005, compared with 11.1% in September...

[T]he annual growth rate of total credit granted to euro area residents rose to 7.7% in October 2005, from 7.3% in September... the annual rate of growth of loans to the private sector rose to 8.8% in October, from 8.6% in the previous month.

As The Prudent Investor comments:

The marginally slower trend is still running at the highest levels seen since the inception of the Euro in 2002. Only 12 months ago M3 accelerated at an annual rate of comparatively moderate 5.8%.

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