Last month witnessed a significant decline in residential construction activity, with a drop of 11%, marking a sharper decline than anticipated, according to a report from the US Census Bureau reports. This development introduces additional caution regarding a potential rate hike in the upcoming Federal Reserve policy meeting. While newly issued building permits showed an increase in October, suggesting a potential bright spot amidst the downturn in housing starts—primarily driven by a reduction in multi-family units—the year-over-year comparisons reveal a dimmer picture.
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Current reviews of the US economic landscape provide no shortage of ambiguity, showing no signs of robust growth. Nevertheless, there remains enough momentum to keep discussions of a rate hike alive for the Federal Reserve’s policy meeting next month. However, this optimism is often tempered by the mixed signals evident in the economic data.
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● US industrial production falls for the second consecutive month in October | WSJ
● Though industrial production declined, manufacturing output saw growth in October, rising for the first time in three months | Bloomberg
● US consumer inflation edged up in October but remains low overall | USA Today
● Home builder sentiment has decreased from a decade high this November | Bloomberg
● An ECB board member states it’s premature to assess the economic impact of the Paris attacks | MNI
The upcoming October report is anticipated to show a decline in housing starts to 1.168 million units (seasonally adjusted annual rate), according to an average forecast from multiple econometric estimates. This prediction indicates a slight decrease from the previous month’s total of 1.206 million units in residential construction activity.
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According to a recent report from the Federal Reserve, industrial output continued its downward trajectory last month. Production in the US fell by 0.2% in October, disappointing expectations for a moderate increase as indicated in two economic surveys. This decline results in a year-over-year increase of only 0.3%—the weakest growth seen in nearly six years.
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Bloomberg reports that “one of Wall Street’s leading bulls” has adjusted its stance on consumer stocks in favor of energy assets: “Thomas Lee, managing partner at Fundstrat Global Advisors, has upgraded energy to overweight while reducing exposure to the consumer discretionary sector, attributing this shift to rising labor costs and the historical inverse relationship between energy and consumer-oriented stocks over the past fifteen years.”
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● NY Fed manufacturing index declines for the fourth consecutive month in November | AP
● US consumers plan to increase spending this Christmas season | Gallup
● UK inflation rates continue to decline in October | Bloomberg
● Economic sentiment in Germany rises according to ZEW for November | Reuters
● Limited repercussions on markets following the Paris attacks | Reuters
● A look at the economic implications of terrorism | NY Times
● France struggles to meet deficit targets following terrorism incidents | MNI
The latest issue of The US Business Cycle Risk Report has been redesigned and now includes a wider array of benchmarks for assessing macroeconomic trends. Starting with yesterday’s edition, each issue evaluates the Chicago Fed National Activity Index and the Philly Fed’s ADS Business Conditions Index, alongside our standard proprietary benchmarks. Check out the current issue here and discover why The US Business Cycle Risk Report has become an essential tool for monitoring macroeconomic risk in the US. Click here for subscription details and stay informed with cutting-edge insights on recession risk.
Forecasts suggest a slight rebound in US industrial production, with an anticipated increase of 0.1% in tomorrow’s October report, compared to the previous month. This forecast contrasts with the 0.2% decline observed in September, according to The Capital Spectator’s average point estimates based on various econometric analyses.
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