US new home sales showed an unexpected decline in September. On a monthly basis, new home sales dropped by 3.6% M/M from a downwardly revised 417 000 to a total number of 402 000. Regional details showed a decline in the South (-10.0% M/M) and West (-10.6% M/M), while sales rose in the Midwest (34.0% M/M) and stayed flat in the Northeast. Months’ supply stayed unchanged at 7.5 in September, while the total number for sale dropped from 261 000 to 251 000. Price details showed that both median and mean prices increased. This is the first decline in new home sales in six months and indicates that the recovery is still fragile. The expiration of the fiscal stimulus in November might have had an impact on the September figures although it is difficult to estimate the exact impact.
In September, US durables goods orders came out in line with expectations rising by 1.0% M/M, while the previous figure was downwardly revised from -2.4% M/M to - 2.6% M/M. Excluding transportation, durable goods orders rose by 0.9% M/M, while the consensus was looking for an increase by 0.7% M/M. Looking at the details, the improvement was led by machinery (7.9% M/M), but also transportation (1.1% M/M) and primary metals (0.3% M/M) increases, while electrical equipment (-0.9% M/M) and computers, electronics (-0.2% M/M) deteriorated and fabricated metals stayed flat.
EMU: German annual inflation flat in October
In October, German HICP inflation rose from -0.5% Y/Y to 0.0% Y/Y, while the consensus was looking for a slightly negative figure. According to the first estimate, inflation rose by 0.2% M/M after dropping by 0.5% M/M in the previous month. Regional data showed declines in food prices while for example clothing and transportation prices rose in October. The rise in energy prices this month together with the steep drop in October 2008 helped to push the overall year-on-year CPI rate substantially higher.
Other: Norway becomes first European country to increase rates
Yesterday, the Norges Bank’s Executive Board decided to increase the key policy rate by 0.25% to 1.50%, becoming the first European central bank to reverse its easing cycle. The bank said that activity in the Norwegian economy has picked up more rapidly than expected and the downturn may be relatively mild. The Executive Board added that the policy rate was reduced to prevent inflation from falling too far below target and to mitigate the impact of the global downturn on the Norwegian economy. The Board signalled more increases than previously forecasted as they said the policy rate should be in the interval 1.25%-2.25% in the period to the publication of the next Monetary Policy Report in March.
