In October, housing starts rebounded by 3% M/M to an annual 1229K units, following an outsized 11.4% M/M plunge in September. Therefore the rebound should be considered as simply a return to the underlying downtrend, especially as the rebound was confined to the volatile multi-family houses. Permits that fell “only” 4.8% M/M in September fell now 6.6% M/M to an annual 1178K units, the lowest since July 1993. There was a further modest decline in the units under construction, but a surprise rise in the completed houses. The former is a positive as it will in due time lead to equilibrium between demand and supply. However, for the foreseeable future, the downturn in housing will continue unabated.
EMU: Belgium consumer confidence plunges
Belgium consumer confidence fell unexpectedly sharp, down to -8 from -1. Such a decline is highly unusual and if it happens it has a very clear driver, like the closure of the VW factory in December of 2006. As such a eye-catching factor is missed now, the decline does need to be taken serious. We are curious to see whether other EMU countries will report a similar decline. Today, Italy publishes its consumer confidence.
Others: Manufacturing output slows, but prices are up
In the UK, the CBI industrial trends survey came out y better than expected, as new orders held up quite well. The survey also highlighted the difficult task central bankers are facing, as an expected slowdown in output growth failed to ease price pressures. Indeed, although the output balance fell to its lowest level for a year, the balance of manufacturers saying prices rose to its second-highest level since 1995. Nevertheless in the end, weaker growth should dampen inflationary pressures and will require lower interest rates.
