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US: Data disppoint

US: Data disppoint

On Tuesday, a series of US economic data all came out on the weaker side of expectations creating further doubts on the strength of the US economy going forward.

The S&P/Case-Shiller Home price index showed that the decline in US house prices accelerated in February. Y/Y house prices as measured by this indicator dropped by 1.0% Y/Y compared to a ??“0.1%Y/Y in January. The index indicates that slower demand and high inventories in houses for sale still weigh on US house prices.

US sales of existing homes in the month of March unexpectedly dropped from 6.68M annual rate to 6.12M (-8.4% M/M). The markets expected a much less aggressive decline by only 4.3% M/M (after an 3.7% rise in February). The series is quite volatile and part of the decline might be weather related, but the figure nevertheless adds to the fear that the slowing in the housing sector still might have some additional negative impact on the US economy going forward.

US consumer confidence in April dropped from an upwardly revised 108.2 (from 107.2) to 104. The markets consensus expected a decline to only 105. This brings the figure to the lows level since August last year. Both the present situation index (131.3 vs 138.5) and the expectations sub-index (85.8 vs 87.9) confirmed the downtrend. Among other things the assessment of the labour market situation was part of the explanation for the weakness in the index.

The Richmond Fed manufacturing survey for the month of April unexpectedly dropped form -10 to -11, while the market consensus expect a small rebound to -6. The report indicates a further contraction in the manufacturing sector in that region.

EMU: Belgian business confidence rebounds in April

In February, euro zone new industrial orders unexpectedly declined for the second month in a row, as orders fell 0.7% M/M following a decline of 0.1% in January. As such, annual growth eased from 12.2% in January to 4.7% in February. In the coming months, the business surveys suggest that some rebound may be expected, but the peak of the industrial cycle is probably behind us. Belgium business confidence nevertheless rebounded in April to its highest level since October last year at 3.8 compared to 1.4 in March. The improvement was driven by most sectors, including manufacturing and trade, while sentiment deteriorated in the construction sector.

Other: CBI industrial trends shows ongoing strength

In the UK, the CBI industrial trends report showed that recent interest rate increases and the strength in sterling are not yet affecting demand, as the growth in new orders is stronger than at any time in the last decade, other than during a short period in 2004. At the same time, businesses are able to restore battered profit margins. As such, business optimism in the manufacturing sector rose to its highest level since January 2004.