Wednesday, 31 January 2007

US consumer confidence up, data generally cool

Yesterday's economic data would have been encouraging to bond investors.

From the US comes the Conference Board's consumer confidence index for January.

The Conference Board Consumer Confidence Index, which had improved in December, edged up slightly in January. The Index now stands at 110.3 (1985=100), up from 110.0 in December. The Present Situation Index increased to 133.9 from 130.5. The Expectations Index, however, declined to 94.5 from 96.3 last month

European data pointed to some cooling in the economy, with Bloomberg reporting that European retail sales dropped in January.

European retail sales dropped for the first time in 10 months in January as spending in Germany slumped, adding to signs economic growth is slowing, the Bloomberg purchasing managers index showed.

An index measuring retail sales in the 13-nation euro economy fell to a seasonally adjusted 47.9, the lowest since February 2005, from 52.1 in December, a survey of more than 1,000 retail executives compiled for Bloomberg LP by NTC Economics Ltd. showed. A reading below 50 indicates contraction.

Meanwhile, German inflation in January was lower than expected.

German inflation accelerated less than expected in January, suggesting retailers didn't pass on all of a Jan. 1 sales-tax increase to customers.

The inflation rate rose to 1.8 percent from 1.4 percent in December, when calculated using a harmonized European Union method, the Federal Statistics Office in Wiesbaden said today. Economists expected inflation to accelerate to 2.2 percent, according to the median of 25 estimates in a Bloomberg News survey. From a month ago, prices fell 0.2 percent.

It was a similar story in the UK. From Reuters:

The Bank of England said on Tuesday mortgage lending rose by 10.58 billion pounds last month, well above the consensus forecast for a 9.5 billion gain and the strongest monthly rise since records began in April 1993.

But new mortgage approvals, which are often used to predict the future health of the housing market, came in much lower than expected at 113,000 in December, falling more than 12 percent from a three-year high of 129,000 in November...

[F]igures from the Nationwide building society earlier on Tuesday showed house prices rose at a subdued rate of 0.3 percent on the month in January, the weakest rise since May last year...

Elsewhere, consumer demand for debt remained subdued, according to Bank of England data, with consumer credit rising by just over one billion pounds in December, broadly as expected.

M4 broad money supply growth was unrevised to show an annual increase of 12.8 percent in December, still strong but continuing to slow from a 16-year high hit last year.

So the slowdown story isn't over, even if a bit overplayed in the US until recently.

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