In January, US existing home sales fell for the second consecutive month, while the consensus was looking for a slight increase. On a monthly basis, existing home sales fell by 7.2% M/M to a total annual number of 5.05M, while a figure of 5.50M was expected. The details show that both single family (-6.9% M/M) and multi-family sales (-8.1% M/M) dropped. Months supply rose from 7.2 to 7.8 in January, the highest level since September 2009. Both median and average prices fell in January. Weakness might have been due to the bad weather and to the termination of the first homebuyer tax credit measures, but in the coming months, existing home sales might receive some support from the extended and expanded tax credit facility.
In the US, the second estimate of fourth quarter GDP showed a marginal upward revision compared to the first estimate. The economy grew by 5.9% Q/Q (annualized) from a first estimate of 5.7% Q/Q. The breakdown shows an upward adjustment in non-residential investment (6.2% from 3.5%) and a larger positive contribution from inventories, while personal consumption (1.7% from 2.0%), residential investment (5.0% from 5.7%) and government consumption (-1.2% from -0.2%) were downwardly revised. Net-exports showed a smaller positive contribution compared to the first estimate.
The Chicago PMI extended its rebound in February, rising for the fifth consecutive months. The headline index increased from 61.5 to 62.6, while a slight decline was expected. The details show a more mixed picture with declines in new orders (62.2 from 66.4), production (65.2 from 66.6), employment (53.0 from 59.8) and inventories (42.4 from 48.7). Supplier deliveries rose sharply (62.6 from 55.3) and also order backlog rose (58.5 from 54.3). Inflationary pressure rose slightly as prices paid rose from 66.2 to 67.7. In February, all regional business confidence indicators improved, which raises expectations that also the manufacturing ISM might improve further in February, although the consensus is looking for a slight decline.
The final figure of Michigan consumer confidence showed a marginal downward revision compared to the first estimate. The headline figure was downwardly adjusted from 73.7 to 73.6, while a slight upward revision was expected. The economic conditions sub-index was downwardly revised from 84.1 to 81.1, while the economic outlook was upwardly revised from 66.9 to 68.4. The downward adjustment was nu surprise after the sharp decline in Conference Board’s consumer confidence.
EMU: Core CPI at lowest level in almost 10 years
In January, the final figure of euro zone CPI inflation for January confirmed the first estimate. CPI inflation rose from 0.9% Y/Y to 1.0% Y/Y, while the monthly figure dropped by 0.8% M/M. Looking at the details, prices of clothing (-11.3% M/M), recreation & culture (-2.3% M/M), hotels & restaurants (-0.7% M/M) and household equipment (-0.7% M/M) fell sharply, but were partially offset by price increases in energy (2.1% M/M), transport (1.0% M/M), food (0.6% M/M) and housing (0.5% M/M) and alcohol & tobacco (0.4% M/M). Core CPI, excluding food and energy, surprised on the downside of expectations as it dropped from 1.1% Y/Y to 0.9% Y/Y, the lowest level since August 2000. In the coming months, CPI inflation is forecasted to stabilize around 1.0% as negative energy base effects should begin to wane.
Other: UK GDP grew faster in Q4 than expected
In the UK, the preliminary estimate of fourth quarter GDP showed a bigger than expected revision. In the fourth quarter of 2009, the UK economy grew by 0.3% Q/Q, compared to the first estimate of 0.1% Q/Q. The breakdown was somewhat disappointing as it revealed that gross fixed capital formation was a serious drag on growth (-3.1% Q/Q), while growth was supported by government spending (1.2% Q/Q), private consumption (0.4% Q/Q) and a slower pace of inventory liquidation. Both exports and imports rose sharply, but the increase in imports was bigger, leading to a negative contribution from net exports. Although the headline figure was upwardly revised, the details raise concerns about the outlook for growth.
