The US housing market is pointing to a slowdown in the economy, but most of the slowdown is yet to come. Reuters summarises yesterday's economic news from the US:
The National Association of Purchasing Management-Chicago said its business barometer rose to 61.5 in May -- the highest since October -- from 57.2 in April. Economists had predicted the index would fall to 56.0...
Markets lurched further to the "rate hike" side on Wednesday afternoon after the release of minutes from the May 10 meeting of the Fed's policy-making Federal Open Market Committee.
Although FOMC policy-makers showed uncertainty about how much more they would need to raise interest rates, they expressed enough worry about inflation to convince many traders that a 17th consecutive rate hike is on the way...
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ended May 26 fell 1.9 percent...
A flurry of reports suggested American consumers may be spending less at the shopping mall but, to no one's surprise, a lot more on gasoline.
MasterCard Advisors' Spending Pulse report for retail sales excluding autos was steady in May, against a 0.7 percent increase in April.
The economic news from the UK yesterday was similarly mixed. From Reuters:
Many economists predict the central bank will raise interest rates later this year -- perhaps as soon as August.
Their case was certainly boosted by a Confederation of British Industry survey showing retail sales picking up fast and set to do even better next month thanks to the World Cup tournament.
But that was offset by official data showing the number of mortgage approvals fell to 106,000 -- the lowest since September 2005 -- in a sign that the recent revival in the housing market is petering out.
GfK NOP's consumer confidence barometer also unexpectedly fell back to -5 from -4 in April as Britons became more pessimistic about their personal finances and were increasingly reluctant to make major purchases.
The Nationwide building society, meanwhile, said house prices eked out a 0.2 percent gain this month, more than in April but still bringing the annual rate down to 4.7 percent.
Yesterday's data from the euro zone, on the other hand, was unambiguously strong. From Bloomberg:
A European Union index of economic sentiment in consumers and companies in the dozen euro nations climbed to 106.7, up from 105.7 last month and the highest since April 2001, the EU statistics office in Luxembourg reported. In Germany, the continent's largest economy, retail sales rose 2.8 percent in April and joblessness had its biggest drop this year...
Inflation also stayed above the ECB's target of just below 2 percent for a 16th straight month in May, accelerating to 2.5 percent from 2.4 percent in the previous month, the EU's statistics office said in Luxembourg today. Economists had predicted the inflation rate would be unchanged.
While the euro zone's employment situation appears to be improving, it may not last. Not when even India's cheap labour may not be cheap enough -- see Andy Mukherjee's "India Badly Needs Jobs; Companies Hire Robots".
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