The US data yesterday confirmed the general slowdown picture. From Reuters:
The Institute for Supply Management said its services index dipped to 57.1 in December from 58.9 in November. This was broadly in line with market expectations for a 57.0 reading...
Supporting the view of a slowing economy was news that factory orders rose 0.9 percent in November, below the market's consensus outlook for a 1.4 percent gain.
In October, new orders declined by a revised 4.5 percent, the Commerce Department said, versus a previous estimate of 4.7 percent. Excluding transportation, November factory orders fell 0.5 percent.
Orders for non-defense capital goods excluding aircraft, seen as a good gauge of business spending, fell 1.1 percent, following a 4.0 percent fall the previous month. The last time this measure fell for two consecutive months was in February and March 2005...
Consumers also appear to be showing signs of fatigue. Retailers posted disappointing December sales, marking the third consecutive month of disappointing growth, according to research firm Retail Metrics. It said 10 retailers lowered their earnings forecasts...
The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in November, fell to 107.0 from 107.5 in October, but held above July's trough. The index had been forecast at 108.0...
The number of workers applying for initial jobless benefits edged up 10,000 to 329,000 in the week ended December 30, beating market expectations. But analysts said the figure had been distorted by the holidays and the job market remained stable...
Backing the view of a stable labor market was an independent report showing that planned layoffs fell 29 percent in December from the previous month.
Planned job cuts for all of 2006 fell below 1 million for the first time since 2000, according to Challenger, Gray & Christmas Inc., an employment consulting firm.
Meanwhile though, the UK economy is still looking relatively hot. Although GfK NOP's monthly consumer confidence index slipped to -8 in December from -7, the Chartered Institute of Purchasing and Supply/Royal Bank of Scotland's services index rose to 60.6 in December, its strongest showing since June 1997 and up from 59.8 in November, while the rate of return for non-financial companies rose to 15.2 percent in the three months to September from an upwardly revised 14.9 percent in the second quarter.
If all this is not enough to suggest another rate hike by the Bank of England, perhaps this Reuters report does:
The Bank of England said lending secured on dwellings rose by 9.830 billion pounds, the biggest jump since September 2003 and up from a downwardly revised 9.705 billion pound rise in October...
Mortgage approvals, an indicator of the future strength of the market, rose to 129,000 in November, the highest since December 2003. Total lending was also strong, up 10.873 billion pounds -- the biggest rise since July 2004.
However...[g]rowth in unsecured lending eased slightly as expected to 1.043 billion pounds from 1.101 billion in October.
...M4 growth slowed to an annual rate of 13.0 percent from 14.0 percent in October. Month on month, M4 grew by 0.5 percent, down from 0.9 percent.
However, the eurozone economy looks somewhat cooler. Bloomberg reports:
Royal Bank of Scotland Group Plc said its services index, which gauges growth in industries from telecommunications to banking, fell to 57.2 from 57.6 in November...
The slowdown in services growth was led by Italy and France, today's report showed. In Germany, Europe's largest economy, the gauge rose...
Euro-region inflation held at 1.9 percent in December, just below the ECB's 2 percent ceiling, Eurostat, the European Union's statistics office in Luxembourg, said today.
Inflation could still fall further after the recent price movements in the oil markets. From AFP/CNA:
A brutal sell-off gripped world oil markets, with London Brent hitting its lowest level in over a year, after data showed rising reserves of US heating fuel during an unusually warm winter.
In London, Brent North Sea crude for February delivery slumped 2.85 dollars to settle at 55.11 dollars a barrel. The contract came off 54.76 dollars, its lowest level since December 1, 2005.
New York's main contract, light sweet crude for delivery in February, sank 2.73 dollars to close at 55.59 dollars a barrel, its lowest level since its 2006 low struck in mid-November.
The Bonddad Blog wonders whether "like the copper sell-off, is this also the markets telegraphing their perception of slower US growth". However, David Gaffen at the MarketBeat Blog says that for most of 2005 and 2006, "it wasn’t the oil industry driving crude higher — it was investors and speculators, who are now selling".
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