In the US, the S&P/CS house price index for September showed house prices falling 4.9% Y/Y compared to -4.3% Y/Y in August. The three-month annualized rate showed a further acceleration in the price declines to -7.4%. The latter may overstate the deterioration in the price outlook somewhat, as in September the housing crisis was probably at its highs. However, all 20 metropolitan areas declined in September compared to August, with Miami (-2.2% M/M and -10% Y/Y) falling the steepest.
The Richmond Fed manufacturing index showed some improved to 0 in November from -5 in October. This means that activity has stopped contracting, but not yet started to grow. However, looking to the sub-indices, the outlook certainly showed no convincing signs of improvement. New orders continued to contract, but at a slower pace (-1 from -8), but the backlog of orders printed very weak at -20. Shipments improved to 1 from -5. Labour market indicators weakened slightly to -1 for employment (from 0) and -5 for the workweek (from -3). Prices were mostly lower.
Consumer confidence plunged sharply lower, according to the Conference Board survey. The headline index fell nearly 8 points in November to 87.3, the lowest since October 2005. Volatility in FM, rising gasoline prices and an expected higher heating bill were put forward as the reasons for the decline. Both the current conditions and the expectation index fell lower, but the latter in a more pronounced way. The current situation in the labour market was considered mixed, but the outlook considered bad.
EMU: Business confidence slightly up, inflation through the roof
In line with the Belgian and Dutch business confidence surveys, business confidence this month also improved slightly in Germany and France. In Germany, the IFO rose from 103.9 in October to 104.2 in November, as companies assessed the current business situation more positively than in October. They were nevertheless slightly more cautious about the outlook. The IFO institute said that “the results indicate that the current strong economy is only gradually cooling”. The sub-indices signalled that especially the manufacturing sector is doing well, while the conditions in the construction, wholesaling and retailing sector remain difficult. Interestingly, the IFO institute added that exporters were more optimistic, despite the recent surge in the euro exchange rate. Also in France, business confidence bucked market expectations for a slight decline and rose from 108 in October to 110 in November. Only in Italy, business confidence deteriorated slightly from 92.8 to 92.2, the lowest level since December 2005.
In Germany, the preliminary November inflation data showed a much larger than expected 0.5% M/M and 3.3% Y/Y increase. This was mainly due to both higher energy and food prices. Falling oil prices last year is still expected to push headline inflation even higher in the months to come. This will cause a serious headache for the ECB which is currently pressured between a slowing economy and rising inflation.
