US consumer credit up in December, signs of slowing elsewhere

US consumer credit rose in December, reports Reuters.

U.S. consumer credit rose by a less-than-expected $3.35 billion in December as credit card debt dipped, while consumer credit for the full year posted the smallest rise since 1992, a Federal Reserve report showed on Tuesday.

How consumer credit growth holds up will be important for consumer spending, especially with the housing market expected to slow in 2006.

U.S. home sales will drop in 2006 as mortgage rates climb and house prices inch up at rates far below those notched last year, a trade group said on Tuesday, noting the long-awaited housing slowdown has begun.

The outlook from the National Association of Realtors came shortly after luxury home builder Toll Brothers Inc., widely seen as a bellwether for the housing market, slashed its sales forecast for the second time in three months.

It is conceivable that the US will follow in the footsteps of the UK economy.

Like-for-like sales rose for the third month running in January, the British Retail Consortium said on Tuesday as it predicted tough trading conditions ahead.

The lobby group said sales rose a meagre 0.2 percent in January on the year. That followed a 2.6 percent annual rise in December and marked the worst start of the year since the survey began more than a decade ago.

The New Economist highlights other bad news for the UK economy, including falls in new car sales and manufacturing orders.

And weakness in manufacturing is not limited to the UK. Following the previous day's report that manufacturing orders in Germany fell for the first time in four months in December, yesterday we had news that industrial production in the country also fell in December. Bloomberg reports:

Output slipped a seasonally adjusted 0.5 percent from November, when it declined 0.4 percent, Germany's Economy and Technology Ministry said in a faxed statement today...

Production of capital goods such as machinery dropped 2.4 percent in December from the previous month, today's report showed. Consumer goods output fell 0.2 percent and production of manufacturing and mining slipped 0.8 percent in the month.