Saturday, 29 December 2007

Inflation returns to Japan but US new homes sales keep falling

The Bank of Japan has been saying that inflation will return. Well, it looks like it has, but it doesn't seem to be making a rate hike by the BoJ any more likely. From Bloomberg:

Japan's inflation rose at the fastest pace in more than nine years in November and industrial production and household spending declined, signaling rising oil costs may derail the economy's longest postwar expansion.

Core consumer prices, which exclude fresh food, climbed 0.4 percent from a year earlier, the statistics bureau said today in Tokyo. Factory output slid 1.6 percent from a month earlier. Households cut spending 0.6 percent, the first drop since July.

Wages fell and employment prospects worsened as job seekers outnumbered vacancies for the first time in two years, the Labor Ministry said today. Surging energy costs rather than consumer spending are driving inflation, making it likely the Bank of Japan will refrain from raising interest rates as growth slows.

In the US, yesterday saw more bad news on housing. However, outside of housing, the economy showed surprising resilience. From Reuters:

New single-family home sales dropped 9 percent to an annual rate of 647,000 in November from a downwardly revised pace of 711,000 in October, the Commerce Department said...

Friday's housing report suggested the new home market may have more room to fall as the inventory of houses for sale rose to 9.3 months' supply from 8.8 months in October. The median sales price of new houses sold in November dipped to $239,100 from $240,100 a year earlier...

The National Association of Purchasing Management-Chicago's business barometer rose to 56.6, its strongest since June, from 52.9 in November...

The National Association of Purchasing Management-New York's index rose to 449.1 in December from 445.0 in November, rising for a third straight month.

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