Thursday 14 December 2006

Higher US retail sales, mortgage applications, UK labour market improves

US retail sales were up in November. MarketWatch reports:

Seasonally adjusted U.S. retail sales increased by 1% in November, the first gain since July, the Commerce Department reported Wednesday.

Excluding the 0.9% gain in motor vehicle sales, retail sales rose 1.1%, the largest gain since January... Excluding gasoline, retail sales rose 0.9%.

Mortgage applications are also rising. Again from MarketWatch:

The volume of applications for mortgages from major U.S. banks climbed to the highest level in more than a year last week, the Mortgage Bankers Association reported Wednesday.

Applications, encompassing both those for loans to purchase homes and for refinancings of existing mortgages, increased 11.4% last week to the highest level since October 2005. Total applications are up 22.2% compared with the same week a year ago. Application volumes had been down by double-digit percentages for most of the year.

Lower mortgage rates have spurred a rebound in loan applications, said Mark Fratantoni, senior economist for the mortgage bankers group, in a press statement. Average rates have fallen about 80 basis points, or 0.8 of a percentage point, since early summer, he noted.

The upturns in retail sales and mortgage applications mean that the US could yet be following the path taken earlier by the UK, which incidentally had upbeat news on employment yesterday. Bloomberg reports:

The number of Britons claiming jobless benefits fell by 5,700 to 950,800, the biggest drop since January 2005, the Office for National Statistics said in London today. Economists expected claims to rise by 4,000, according to the median estimate in a Bloomberg survey of 30 economists. The jobless rate was unchanged for a ninth month at 3 percent...

Wages growth excluding bonuses rebounded to an annual 3.8 percent from August through October from the 3.5 percent gain in the previous period, which was the slowest since July 2003.

Higher energy bills pushed consumer prices up an annual 2.7 percent in November, the most since the index was introduced in January 1997, the statistics office said yesterday...

The number of employed in the economy rose 41,000 to 29 million in the three months ended October, the second highest on record. Employment reached a record 29,015,000 in the three months ended August...

Unemployment measured by International Labor Organization standards fell 7,000 to 1.7 million in the three months ended October and the rate dropped 0.1 percentage point to 5.5 percent.

On hindsight, the BoE had apparently stopped its rate hike cycle too soon. The Fed had been more persistent in its rate hikes, but it had started from a lower rate.

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