Wednesday, 27 August 2008

US economic indicators improve but Europe's show deterioration

There were some hopeful signs for the US economy yesterday. Bloomberg reports:

Confidence among American consumers improved in August for a second month as the surge in gasoline prices and the slide in home values abated.

The Conference Board's confidence index rose to 56.9, higher than economists had forecast. House prices in 20 major cities declined at a slower pace for the fourth straight month in June, the S&P/Case-Shiller index showed...

The S&P/Case-Shiller's measure of prices in 20 metropolitan areas fell 0.5 percent from the previous month, with nine areas reporting a gain compared with seven in May. Prices were down 15.9 percent from the previous year, less than economists had projected...

The Commerce Department said sales of new homes rose to an annual pace of 515,000 in July, from 503,000 in June.

And the Richmond Fed's latest manufacturing survey shows that while manufacturing activity in the central Atlantic region continued to drift lower in August, optimism about future business prospects edged higher.

While these provide some tentative signs that the US economy may be approaching a bottom, other reports yesterday show that Europe is clearly suffering.

In Germany, Bloomberg reports that a recession looms.

German business and consumer confidence fell more than economists forecast, heightening concern that Europe's largest economy may be slipping into a recession.

The Munich-based Ifo institute's business climate index, based on a survey of 7,000 executives, dropped to a three-year low of 94.8 from 97.5 in July. Consumer sentiment slumped to the lowest level in five years, according to Nuremberg-based market research company GfK AG...

The economy contracted 0.5 percent in the three months through June as construction slumped and companies and households reduced spending, the Federal Statistics Office confirmed today. Exports also fell.

The UK economy is also facing difficulties. Reuters reports:

Approvals for new home loans fell 65 percent on a year ago in July to hold near a record low and the British Bankers' Association said on Tuesday it was not expecting a housing market recovery soon...

The Confederation of British Industry added to the downbeat outlook on Tuesday, with its quarterly services sector survey showing a sharp decline in profitability and confidence.

Trouble in the housing sector appears to be a common theme. The French economy is no exception, according to a Bloomberg report.

France's stock of new, unsold homes reached a record in the second quarter, when the euro region's second-largest economy shrank.

The difference between the number of new homes put on the market and those purchased reached 110,500 in the three months through June, the Environment Ministry said in an e-mailed statement sent late yesterday. Sales dropped 34 percent in the quarter from a year earlier, it said...

Other figures released today add to signs that the slowdown is deepening. Housing starts dropped 12 percent in the three months through July from a year earlier and home permits fell 17 percent in the period, the ministry said today.

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