U.S.:
U.S. Housing Starts Steady, Permits Rise Ahead of Hurricanes
Steady U.S. new-home construction in August together with a jump in permits indicate the housing market was moving ahead before a likely temporary hit from Hurricanes Harvey and Irma, government figures showed Tuesday.
HIGHLIGHTS OF HOUSING STARTS (AUGUST)
- Residential starts fell 0.8% m/m to a 1.18m annualized rate (est. 1.174m) after upwardly revised 1.19m pace the prior month
- Single-family home starts rose 1.6% to 851k; multifamily starts, such as apartment buildings and condominiums, fell 6.5% to 329k
- Permits, a proxy for future construction, rose 5.7% to 1.3m rate (est. 1.22m), highest since January, from 1.23m pace
- Data collection on housing starts was below normal in Texas, Florida areas affected by storms
Key Takeaways
The pace of ground-breaking may show swings for several months following Harvey’s extensive damage to southeast Texas in late August and Irma’s landfall in Florida in early September. Higher prices for construction materials also have the potential to pinch the industry, which is already contending with a shortage of workers and ready-to-build lots. Reflecting the heightened concerns, builder sentiment was weaker than estimated in September. At the same time, the solid job market and still-low mortgage costs will probably continue to underpin housing demand. Activity may rebound later this year and in early 2018 as rebuilding efforts begin in areas hit by the Atlantic hurricanes.
Europe:
German investors more upbeat than expected in September
The mood among German investors improved more than expected in September as worries about the stronger euro EUR= faded, suggesting that markets expect Europe’s biggest economy to continue its solid performance in coming months. Record-high employment, rising real wages and ultra-low borrowing costs are driving a consumer-led upswing in Europe’s biggest economy that looks set to help Chancellor Angela Merkel win a fourth term in office in a federal election on Sunday. The Mannheim-based ZEW research institute said its monthly survey showed its economic sentiment index rose to 17.0 from 10.0 in August. This beat a Reuters consensus forecast for an increase to 12.5. A separate gauge measuring investors’ assessment of the economy’s current conditions edged up to 87.9 from 86.7 last month. This compared with the Reuters consensus forecast predicting a dip to 86.6. In a further positive sign for the German economy, the HDE retail association on Tuesday raised its 2017 forecast for nominal sales to grow by 3 percent, up from its previous prediction of 2 percent. ZEW head Achim Wambach said financial market experts were more upbeat because of Germany’s solid economic growth figures in the second quarter, a surge in bank lending and increased investment activity by both the government and firms.
South America:
Brazil’s inflation likely held near 18-year low in mid-September
Brazil’s inflation rate likely held near an 18-year low through mid-September, a Reuters poll of economists showed on Monday, sparking bets that it may end the year below the central bank’s target. Consumer prices as measured by the IPCA-15 index probably rose 2.60 percent in the twelve months through mid-September, according to the median of 24 forecasts in the poll. That would be the lowest mid-month reading since 1999, when Brazil adopted its current inflation-targeting regime, though a tad above the 2.46 percent rate at the end of last month. Economists at UBS see “growing risks” that inflation will be below the bottom end of the central bank’s 2017 target range of 4.5 percent plus or minus 1.5 percentage points. Even the highest forecast in the September poll lagged far behind that level, at 2.73 percent, with the lowest at 2.49 percent. The central bank has missed its inflation target three times in the last two decades, but has never undershot it. That could give it reason to slow the pace of interest rate cuts slightly when it meets again in October, after signalling a gradual end to monetary easing earlier this month.
