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Housing, Leading Index Probably Improved: U.S. Economy Preview


By Courtney Schlisserman

Oct. 18 (Bloomberg) -- Homebuilders and real-estate agents were probably busier in September, and the index of leading indicators increased, adding to evidence the next U.S. expansion has begun, economists said before reports this week.

Construction started last month on 610,000 houses at an annual rate, the most since November, according to the median forecast of 53 economists surveyed by Bloomberg News before an Oct. 20 Commerce Department report. Sales of existing homes rose to a two-year high and the gauge of the economy’s future course advanced for a sixth month, other reports may show.

Housing is stabilizing as Americans take advantage of government programs, including credits for first-time buyers and efforts to lower borrowing costs, aimed at stemming the recession. Some Federal Reserve policy makers remain concerned the economy will relapse should the stimulus be removed too soon, signaling interest rates will remain low for months.

“The housing market is recovering from very depressed levels,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “We’re definitely emerging from recession, finding a bottom in some sectors, but the recovery is still uneven and it’s not particularly vigorous.”

Building permits, a sign of future activity, may have risen to a 590,000 pace, also the highest since November, the Commerce Department’s report on housing starts may show, according to the survey median.

In April, builders broke ground on new homes at a record- low 479,000 pace.

Leading Index

The index of leading economic indicators, due from the New York-based Conference Board on Oct. 22, may have risen 0.9 percent, according to the survey of economists. The gain was probably driven by the increase in building permits, a drop in claims for jobless benefits and an improvement in consumers’ outlooks, economists said.

A sixth consecutive gain in the leading index would mark the best performance since early 2004.

U.S. stocks have risen in recent weeks amid better-than- forecast earnings and signs the economy is improving. The Standard & Poor’s 500 Index closed at the highest level in a year on Oct. 15.

Google Inc., the world’s most popular Internet search engine, plans to resume hiring and acquisitions after the recovering economy helped third-quarter sales beat analysts’ estimates. Large customers stepped up spending on Google ads last quarter, a rebound from the first half of the year, Chief Financial Officer Patrick Pichette said.

‘Incredible Recession’

“We weathered what is an incredible recession,” Pichette said in an interview last week. “If you have all this behind you, the only outcome you should have as management is: ‘OK, let’s build now.’”

Fed policy makers at their September meeting decided to slow purchases of mortgage securities to avoid disrupting the housing market while extending the duration of the program by three months. In the minutes of the Sept. 22-23 meeting, which were released last week, they noted the housing market and retail sales got a boost from government incentives.

The Fed’s Beige Book report on regional economies, scheduled to be released on Oct. 21, will be used by policy makers to gauge the state of the housing market and the economy overall when they meet again in the first week of November.

An Oct. 23 report from the National Association of Realtors may show that sales of existing homes rose to a 5.35 million rate last month, according to the Bloomberg survey. That would be the highest level since August 2007.

Less Pessimistic

Tomorrow, a report may show builder confidence continued to climb this month. The National Association of Home Builders/Wells Fargo index probably rose to 20 from 19, economists surveyed said. It would be the seventh straight increase. While higher, readings less than 50 still signal that most respondents view conditions as poor.

Finally, a Labor Department report on Oct. 20 may show wholesale prices were unchanged in September, compared with a 1.7 percent increase a month earlier. Excluding food and energy, prices increased 0.1 percent, compared with a 0.2 percent gain in August, according to the survey, indicating inflation isn’t a risk as the economy recovers.

 

Hi.

How do you read this breaking through, please?

singaporegal      ( Date: 18-Oct-2009 11:27) Posted: The 10,000 level in the Dow represents a significant resistance line. I see this level tested a few times before it finally breaks through

 

When you compare the rest of the world with US, which economy are the worse???..US is expected to outperform in 2010..acc to W. bank....US is better..

and why the dollar keep dropping..so this carry trade is quite hugh and scaring...last wave down for the dollar...so far only a matter of time for it to turn up strongly...then stock and oil and gold will collapse ...

i guess 74 to 75 the most..and i guess we have only 1 to 2 month left to bull abt...

 

The 10,000 level in the Dow represents a significant resistance line. I see this level tested a few times before it finally breaks through

 

So scary!

handon      ( Date: 16-Oct-2009 22:09) Posted: expect another 100pts fall.... hehe....

 

dun believe it.... later DOW dun jump.... my turn to jump....

hehe....

 

y not just hit n run.

 

dj intraday sometimes volatile.

handon      ( Date: 16-Oct-2009 23:49) Posted: accelerated shorting on the way.....

 

accelerated shorting on the way..... 

 

weak dollar have makr corporate Ameriac sell and profit....dont let just one BOA change your outlook...

I am expecting Summer to come out next month to declare recession is over..GDP in the positive..

BOA is just one bad..only..no worry.

 

Industrial production in surprise jump

The Federal Reserve says output rose 0.7% in September versus a forecasted 0.2% rise.

 

Hope the fall will be minimised at ending stage.

 

Production in U.S. Increases More Than Anticipated (Update2)



By Shobhana Chandra

Oct. 16 (Bloomberg) -- Industrial production in the U.S. rose more than three times as much as anticipated in September, putting manufacturing at the forefront of the emerging economic recovery.

The 0.7 percent increase in production at factories, mines and utilities exceeded every forecast of economists surveyed by Bloomberg News and followed gains of 1.2 percent in August and 0.9 percent in July, Federal Reserve figures showed today. Capacity utilization, which measures the proportion of plants in use, climbed to the highest level in seven months.

The recent burst of activity on factory floors, spurred in part by a rebound at automakers, will likely give way to more moderate and sustainable gains in coming months as companies rebuild inventories and exports grow. The improvement has yet to generate jobs, underscoring why Fed policy makers say they will keep interest rates low for a long time.

“Manufacturing is turning around from deep recession to strong growth in a very sort time,” said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York. “It’s going to be one of the important supports to growth.”

Industrial production was forecast to increase 0.2 percent after a previously reported 0.8 percent gain in August, according to the median estimate of 77 economists surveyed by Bloomberg News. Projections ranged from a gain of 0.5 percent to a drop of 0.5 percent.

Stocks Hold Losses

Stocks were down after the report, depressed by disappointing results at General Electric Co. and Bank of America Corp. The Standard & Poor’s 500 Index was down 0.9 percent to 1,087.03 at 9:33 a.m. in New York. Treasury securities rose, pushing the yield on the 10-year note down to 3.42 percent from 3.46 percent late yesterday.

Manufacturing accounts for about 12 percent of the U.S. economy. The jump in production over the past three months was the biggest since late 2005.

Capacity use climbed to 70.5 percent last month from 69.9 in August, the report showed. It was estimated to rise to 69.8 percent, according to the Bloomberg survey median.

Economists track plant operating rates to gauge factories’ ability to produce goods with existing resources. Lower rates reduce the risk of bottlenecks that can force prices higher.

Factory output, which accounts for about four-fifths of industrial production, increased 0.9 percent after a 1.2 percent gain the prior month.

Other Components

Utility production dropped 0.7 percent and mining output, which includes oil drilling, increased 0.7 percent.

Motor vehicle and parts production climbed 8.1 percent following a 6.1 percent increase the prior month.

“Cash for clunkers,” which offered incentives of as much as $4,500 for consumers to trade in old cars for more fuel- efficient ones, helped automakers trim stockpiles as sales climbed in July and August. Industry data showed sales plunged in September after the plan expired on Aug. 24.

General Motors Co. and Toyota Motor Corp. have predicted sales gains for the fourth quarter. GM on Oct. 7 said it plans to boost output to 655,000 vehicles in North America during this quarter to match increasing demand.

The increases in output last month were widespread. Factory production excluding motor vehicles increased 0.5 percent, and the diffusion index gauging the number of categories advancing was 56.9 in September, exceeding the 50 breakeven level for a second month.

October Expansion

Regional reports yesterday showed gains in manufacturing extending into October. The New York Fed’s Empire State index soared to the highest level since mid-2004, while the Philadelphia Fed’s gauge eased off September’s two-year high.

Minutes of the Fed’s September meeting, released this week, showed policy makers believed “overall economic activity was beginning to pick up,” and noted the improvement in factory output, particularly motor vehicle production.

Winnebago Industries Inc., the motor-home maker, yesterday reported a fiscal fourth-quarter loss that was smaller than analysts had estimated. The Forest City, Iowa-based company said it’s seeing a pickup in demand.

“Dealer inventory is very close to reaching the bottom, and our dealer partners will need to start to replenish soon to satisfy retail demand going forward,” Chief Executive Officer Bob Olson said in a statement.

Fewer Stockpiles

Inventories at businesses fell 1.5 percent in August, the biggest drop this year, bringing the value of goods on hand down to $1.31 trillion, the least since December 2005, according to Commerce Department data this week.

American factories may also get a boost as more than $2 trillion in government stimulus programs worldwide are reviving demand from Asia to Europe. Exports climbed in August for a fourth consecutive month to reach the highest level of the year, according to Commerce Department figures.

Inventories at businesses fell 1.5 percent in August, the biggest drop this year, bringing the value of goods on hand down to $1.31 trillion, the least since December 2005, according to Commerce Department data this week

 

expect another 100pts fall.... hehe....

 

i thk dow  may end slightly down...BOA.loss 26c instead of 21c is  slightly less than expected...not forgetting Goggle report good profit.beat expectation...and more good report to come

BOA is expecterd to be bad becos of Merril...we see later...it is knee jerk ..

many more good reporting on the way...no worry.

 

Short Big WIN BIG.... still not too late to short BIG... hehe.... 

 

at least 100pts fall later.... short sure win Big BIG.... hehe.... 

 

I doubt an average american in US  have much to save...their government using their tax payers trillion and trillion of  money to pay to bail out the banks their government think is TOO BIG TO FALL, and the AIG, and trillions of debts at people's expense that led to more companies closure, more unmployment and pay-cutting.  What can an average Joe do?

equitypassion      ( Date: 15-Oct-2009 23:41) Posted: 15 Oct 2009 Forgive me if I am wrong :) Below is how i feel STI has been running for quite sometime and he is getting tired. STI (presently 2712) is forcing himself to continue running  because Dow Jone (presently 9999)  is taking  a cane chasing after him. ( It is like a parent taking a cane chasing after their naughty child ). If Dow slow down , STI will take opportunity to catch some Rest between  STI 2400 to 2500. Be alert when investing at this moment of time. Cheap Stock has become expensive (eg Jiutian, I manage to purchase some at 0.035 but now it is 0.21 (I sold off my last piece at 0.18), I also manage to purchase China farm at 0.055 but now is 0.26 (I sold off my last piece at 0.21). I believe there are a lot of fund manager and investor who bought at high two years back are waiting to get out if something is not right. As for Dow Jone index, lets hope it can stable and move forward at reasonable pace because unemployment rate is still high and recently it is often to come across news or comments that US citizens start to save. If US citizen start to "enjoy saving"..... Thanks for Reading :) Invest Happily :) God Bless U :)

 

Okay I take your words and put on trust to you!

risktaker      ( Date: 16-Oct-2009 07:55) Posted: Mega funds still BUY IN HUGE -- Rally will substain at least till end of next week. Overseas Funds have entered SG market too. Watch out for some real action next couple of days HUAT AH risktaker      ( Date: 14-Oct-2009 00:02) Posted: You think the mega funds buy for fun ? lol not easy to get in and get out all at once "with this kind of volume" :) U need time ... Enjoy this ride while you can.

 

Risktaker, good post! Yes BB buying takes time due to big vol. Momentum will be on for a few more days. Enjoy the ride as i've anticipated.
Huat ah....

lawcheemeng      ( Date: 16-Oct-2009 08:05) Posted: risktaker....how do you monitor the movement of funds Thanks...... risktaker      ( Date: 16-Oct-2009 07:55) Posted: Mega funds still BUY IN HUGE -- Rally will substain at least till end of next week. Overseas Funds have entered SG market too. Watch out for some real action next couple of days HUAT AH

 

risktaker....how do you monitor the movement of funds Thanks......

risktaker      ( Date: 16-Oct-2009 07:55) Posted: Mega funds still BUY IN HUGE -- Rally will substain at least till end of next week. Overseas Funds have entered SG market too. Watch out for some real action next couple of days HUAT AH risktaker      ( Date: 14-Oct-2009 00:02) Posted: You think the mega funds buy for fun ? lol not easy to get in and get out all at once "with this kind of volume" :) U need time ... Enjoy this ride while you can.