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US :Consumer confidence crashes, house prices dive, but Richmond manufacturing revives
Wed, Mar 26 2008, 11:00 GMT
by KBC Market Research Desk
The March consumer confidence report of the Conference Board was awful and painted a consumer in disarray. Indeed, the headline index plunged another 16 points to 64.5 (versus consensus estimate of 73.5) the lowest level since March 2003, just before the invasion of Iraq. The report contained only one small positive, notably consumers’ home buying plans increased. All other indicators were awful. The present situation index plunged to 89.2 from 104 and theexpectations index even to 47.9 from 58, which is effectively the lowest value since the end of 1973 (first oil crisis). Also now high energy prices, but now also a weak labour market and a crashing house market explain the weakness. Both the indications on the labour market and on the business climate deteriorated strongly (both for the current situation and for the expectations). To make bad things worse, inflation expectations for the next 12 months rose to 6.1% from 5.3%
The S&P Case/Shiller house price index continued to tumble in January. The headline composite index (20 metropoles) dropped 2.4% M/M and 10.7% Y/Y, down from -9% Y/Y in December. The composite index for 10 metropoles fell even slightly more (-11.4% Y/Y). All 20 metropoles registered declines in a month-to-month perspective, with only one, Charlotte, still in positive territory year-on-year (1.8% Y/Y). The steepest declines were in Miami and Las Vegas, both down 19.3% Y/Y, followed by LA (-16.5% Y/Y) and San Francisco (-13.2% Y/Y). There are no signs yet that the decline is losing momentum, even if such stellar drops might gradually attract some household. However, the credit crunch makes it difficult to get a loan. The OFHEO house price data showed a similar picture, even if the declines are less pronounced.
The Richmond Fed survey on manufacturing surprised on the positive side, bucking the trend set by the NY and Philly Fed surveys released last week. Indeed, after six months of negative readings, the manufacturing index jumped to 6 in March from -5 in February. A similar increase was registered for new orders and shipments even climbed to 13 from -4. Employment stabilized at -4 and the price indices went up slightle (prices received) and strongly (prices paid). As such the outcome might suggest an improvement in the national ISM to be released on April 1, but given the weakness of the NY and Philly Fed surveys, we suspect the Richmond one is not representive for the overall situation in the country.
Published on Wed, Mar 26 2008, 11:03 GMT
Archive
- EMU: Retail sales continue to disappoint
Published On Thu, May 8 2008, 07:41 GMT - EMU: PMI results confirmed
Published On Wed, May 7 2008, 07:33 GMT - US: ISM non-manufacutring rebounds
Published On Tue, May 6 2008, 07:41 GMT - US: Payrolls decline less than expected
Published On Mon, May 5 2008, 07:51 GMT - US: Consumer confidence declines further
Published On Wed, Apr 30 2008, 08:17 GMT
KBC Bank
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http://www.kbc.be/dealingroom | piet.lammens@kbc.be
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