Both housing starts and permits showed a sharp decline in December. Housing starts dropped by 15.5% M/M from an upwardly revised 651 000 to 550 000. Housing permits fell by 10.7% M/M from a downwardly revised 615 000 to 549 000. Houses under construction dropped by another 3.3% M/M in December and houses completed declined by 5.2% M/M after rising 1.6% M/M. In December, both housing starts and permits plunged to a new record low which clearly indicates that housing market conditions continue to deteriorate and a recovery is not around the corner.
In the week ended January 17, initial claims rose by 62 000 from an upwardly revised 527 000 to 589 000, while the consensus expected an outcome of 543 000. Initial claims are now at their highest level since 1982 and are expected to climb further in the coming weeks and months. Continuing claims, which are reported with a one-week lag, rose from an upwardly revised 4 510 000 to 4 607 000. The consensus expected to see a figure of 4 534 000. The sharp rise in initial claims is partially due to the automotive shutdowns and they are also expected to have a significant impact in the weeks to come.
In November, the house prices index showed a steeper than expected drop. House prices fell 1.8% M/M, while the consensus was looking for a decline of 1.2% M/M.
EMU: Industrial new orders slightly better than expected
In November, industrial new orders dropped 4.5% M/M, while the consensus expected a decline of 5.0% M/M. The October outcome was downwardly revised from - 4.7% M/M to -5.7% M/M. On a yearly basis, industrial new orders are down 26.2% Y/Y. Looking at the details, basic metals (-8.3% M/M) and transport equipment (- 6.3% M/M) declined sharply, but also machinery & equipment (-4.9% M/M), chemicals (-2.9% M/M) and electrical & optical (-2.0% M/M) dropped. Textiles was the only index showing an increase.
French consumer spending surprised on the downside in December. On a monthly basis, consumer spending dropped 0.9% M/M, while a drop of 0.2% M/M was forecasted. Looking at the details, retail sector dropped by 1.5% M/M, household goods fell by 1.8% M/M, textiles declined by 1.2% M/M and durables dropped by 0.5%M/M. Cars (0.9% M/M) was the only sub-index showing an improvement. This significantly weaker than expected outcome indicates that household spending contracted significantly in the fourth quarter of 2008.
Other: CBI shows sharp decline in industrial orders
In the UK, the CBI industrial trends survey showed a significant decline in January. Total orders dropped from -35 to -48 and export orders fell from -33 to -39. Volume of output showed a slight decline (-43 from -42), while average prices showed a sharp drop (-12 from 0). The CBI’s Chief Economic Adviser said the survey showed that manufacturing in Britain, as elsewhere, is being hit hard by the economic downturn. He added that most firms expected conditions to get even worse, with further falls in orders expected, leading to more job cuts.
