Early morning US Indicator released point to continued deflation risk, deepening pressure in the housing market, and a decline in the manufacturing sectors. The recession continues unabated and no significant signs of economic improvement were shown today.
Import prices showed a decline of 1.1% in January, coming in slightly better than the survey estimate for a 1.2% decline. Year-over-year decline accelerated to a new low of -12.5% and marks a long reversal from growth of 21.4% last July at the height of the commodity bubble. The drop in prices for the 6th month reflects continued weakness in demand and downward pressure of commodities. Consumer prices will likely continue to decline as should the trade deficit which currently sits at a recent low of -$39.9B.
Housing data released today came in weaker than expected with Housing Starts at an annualized 466K and Building Permits at 521K; the two indicators had been expected to decline to 529K and 525K, respectively. Housing starts plummeted to the lowest level since the indicator was first measured in 1959 and has been in a downtrend since peaking at 2.273M in January 2006. Building Permits also dropped to the lowest level since recording began and have been in a continual slide since peaking at 2.263M in September 2005. The continuing weakness is a reflection of large inventories of unsold homes as well as price and lending declines that have kept builders from expanding production of new homes. Barack Obama is said to be unveiling a plan later today that will aid mortgage holders and possibly limit further downside in the housing market.
Industrial Production declined for the 3rd month by 1.8% in a general slide that began early in 2008; economists surveyed had expected a decline of 1.5%. Continued weakness in manufacturing reflects a contraction that does not appear to be easing. Capacity Utilization also declined to a new record low of 72.0% from 73.6% as companies scale back production amid expectations for weakness in future demand. The recession continues unabated and no significant signs of economic improvement were shown today.
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