In February, both housing starts and permits came out higher than expected. Housing starts rose by 22.2% M/M to 583 000 after falling sharply in the month before. The rebound was due to a 82.3% increase in multi family houses, a volatile subsector, while single family rose by a modest 1.1% M/M. Building permits showed a more moderate improvement, rising by 3.0% M/M to 547 000 due to a 11.0% rise in singly family, while multi family dropped by 10.8% M/M. Houses under construction dropped by 2.7% M/M, while housing completed rose by 2.3% M/M. These data are encouraging as it is the first rise in both housing starts and permits since April of last year, but it is still too early to conclude that the housing market is recovering.
US producer prices rose by 0.1% M/M in February, less than the expected 0.4% M/M. On a yearly basis producer prices are down by 1.3% Y/Y. Looking at the details, energy rose by 1.3% M/M, while food fell by 1.6% M/M. Core PPI, excluding food and energy, rose by 0.2% M/M mainly due to rising prices of tobacco goods, light motor trucks and woman’s apparel. In the coming months however, prices are expected to fall significantly, but recent core PPI readings seems to suggest that deflation risks are probably smaller than expected two months ago.
EMU: ZEW shows fifth consecutive improvement
In March, the German ZEW index, that surveys sentiment of analysts and investors, showed its fifth consecutive improvement. The headline index (expectations) rose from -5.8 to -3.5, while a slight worsening was expected after the impressive rebound last month. The current situation, on the contrary, deteriorated somewhat (-89.4 from -86.2). The ZEW index is now significantly above the low of -63.9 reached in July, which is encouraging. But the index lost much of its correlation with other confidence indicators, remaining close to their record lows.
