Tuesday, 20 December 2005

US home builder sentiment, European industrial output decline, German prospects improve

There is more evidence -- though not conclusive -- from the NAHB that the US housing market may be peaking.

Confidence of single-family home builders slid further this month from its summer peak, yet remained well within the positive range, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for December, released today. The overall HMI declined four points from a slightly revised November number to 57, while the component measuring builder expectations for future sales held firm at 65...

The overall HMI declined from 61 to 57 in December – its lowest level since April of 2003, when it stood at 55. The components for current sales and traffic of prospective buyers were each down this time around, by four points to 63 and seven points to 39, respectively. However, the component gauging builder expectations for the next six months held firm at 65.

There was confirmation from Eurostat yesterday of Europe's weak industrial production in October.

Seasonally adjusted industrial production fell by 0.8% in the euro-zone in October 2005 compared to September. Production decreased by 0.3% in September but grew by 0.8% in August. Output in the EU25 fell by 0.7% in October 2005, after increases of 0.1% in September and of 0.3% in August.

In October 2005 compared to October 2004, industrial production rose by 0.1% in the euro-zone and by 0.2% in the EU25.

German industrial production was quite good, though, rising 1.1 percent in October. And there was more good news for Germany yesterday as the Ifo institute raised its forecast for growth next year to 1.7 percent from a June forecast of 1.2 percent, saying export-led growth may spur companies to increase domestic spending, even as the Economy Ministry noted that prospects for a recovery "have strengthened further".

Rising prices reflect the economic recovery, although German producer prices did fall from October.

Producer-price inflation in Germany, Europe's largest economy, accelerated to the fastest rate in 23 years in November on higher energy costs.

Prices for goods from plastics to newsprint were 5 percent higher in November than a year earlier compared with October's 4.6 percent annual gain, the Federal Statistics Office in Wiesbaden said in a statement today. Economists expected the rate to quicken to 4.9 percent, according to the median of 30 estimates in a Bloomberg survey. From October, prices fell 0.1 percent.

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