Housing starts are expected to increase to an annual pace of 1.030 million in tomorrow’s update for November, according to The Capital Spectator’s median point forecast for several econometric estimates. The projection represents a moderate improvement over October’s 1.009 million units.
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Industrial output increased sharply in November vs. the previous month, rising at a rate that beat expectations by a wide margin (+1.3% vs. Econoday.com’s consensus forecast of +0.7%) . This morning’s monthly release strengthens the case for expecting that the Federal Reserve will begin raising interest rates next year, perhaps sooner than the mid-2015 forecast that’s been widely cited in recent weeks. Meantime, today’s numbers clearly show that the US economy so far appears to be immune to the economic slowdown that’s weighing on China and the stagnation that continues to afflict the Eurozone. Today’s bullish report on industrial activity follows surprisingly strong November numbers on retail sales and payrolls for the US.
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The Federal Reserve’s policy statement and updated economic forecast due out on Wednesday will be closely read in the wake of last week’s volatile market action – the US stock market suffered its worst week in several years while crude oil tumbled to a five-year low. The US economy, however, continues to deliver encouraging news, based on last week’s updates. Notably, the mid-December reading of the Reuters/University of Michigan’s measure of consumer sentiment rose to its highest reading since January 2007. Meanwhile, retail sales posted a sharply higher-than-expected increase in November. We also learned from the US Labor Department that job openings inched higher in October, close to a 14-year high. The upbeat run of numbers is expected to continue this week with today’s release on industrial production and tomorrow’s report on housing starts. No wonder that analysts continue to project that the Fed will start raising interest rates next year, perhaps midway in 2015, as many economists predict.
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● Abe reaffirms Japan’s reflationary policies after election victory | Reuters
● China’s Central Bank Sees 2015 GDP Growth Slowing To 7.1% | MNI
● Germany Leading Index Drops In October | RTT
● Consumer Sentiment in U.S. Rises to Eight-Year High | BusinessWeek
● Oil Slump Blindsides Bulls That Wagered on Rout Ending | Bloomberg
● Hong Kong’s Final Protest Site Has Been Cleared | Time
● Elections in Greece may pose new threat for Eurozone | Guardian