EUR/USD - essential news and trading ideas

U.S. housing market mired in weakness as mortgage rates go up

U.S. homebuilding rose in October amid a rebound in multi-family housing projects, but construction of single-family homes fell for a second straight month, suggesting the housing market remained mired in weakness as mortgage rates march higher.
Other details of the report published by the Commerce Department on Tuesday were also soft. Building permits declined last month and homebuilding completions were the fewest in a year. Housing starts increased 1.5% to a seasonally adjusted annual rate of 1.228 million units last month.
Building permits fell 0.6% to a rate of 1.263 million units in October. The market had forecast housing starts rising to a 1.225 million-unit pace last month.
The struggling housing market is in stark contrast with the broader economy, which has enjoyed two straight quarters of robust growth and an unemployment rate at a near 49-year low of 3.7%. Prolonged housing weakness, together with a relentless sell-off on the stock market could stoke fears over the durability of the economy's strength.
In addition to rising borrowing costs, the housing market is also being squeezed by land and labor shortages, which have led to tight inventories and more expensive homes. Many workers are being priced out of the market as wage growth has lagged.
Tuesday's data also suggested that housing supply is likely to remain tight in the near term. Homebuilding completions in October fell 3.3% to a rate of 1.111 million units, the lowest level since September 2017.
Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to plug the inventory gap.
The stock of housing under construction rose 0.5% to a more than 11-year high of 1.137 million units last month. But the multi-family homes segment made up just over half of housing inventory under construction last month.

Market news and trading strategies by MyFXspot.com - fundamental support for traders

Eurozone PMI lost further momentum

The Eurozone composite PMI declined further in November, down to 52.4 from 53.1 – the lowest level since January 2015. At face value, the data points so far available are consistent with annualized GDP growth of about 1.5% in the fourth quarter 2018.
Much of the weakness continues to be recorded in the industrial sector. Rising protectionist fears and a weaker global trade keep taking their toll on the manufacturing PMI (down to 51.5 from 52.0), with the export order index slipping further into contractionary territory (down to 48.8 from 49.1). Germany experienced the steepest monthly decline in new exports orders in almost six years, with companies explicitly reporting shrinking sales in China, Turkey and Italy. At 50.4, the output index for the eurozone manufacturing PMI is now close to the threshold for stagnation, after having hit one of its highest levels on record (62.2) last December.
The manufacturing-led slowdown has spilled over into the services sector (services PMI down to 53.1 from 53.7), which is related to rising political uncertainty, tighter financial conditions and higher prices as main cause of weakening consumer and corporate demand. Business expectations for the coming year dropped to a four-year low (60.3 from 68.0 in January). On an encouraging note, we think that the recent sharp drop in oil prices will progressively ease most of the price pressure that has weighed on households’ real income and corporate profits.
When it comes to jobs creation, both manufacturing and services firms kept beefing up their workforce, albeit at a declining pace.
Country-wise, the further deceleration recorded by the German PMIs (Composite PMI down to 52.2 from 53.4) deserves attention. The Ifo index that will be published on Monday, and in particular the expectations component for the car sector, should provide better insight of short-term trends there. The French PMIs proved to be more resilient (Composite index down to 54.0 from 54.1), with healthy (but softening) growth in the services sector partly offsetting the weakness experienced by manufacturers.
Today’s survey is a further piece of information that will induce the ECB to revise down its growth forecasts at the December meeting and to sound more cautious on the outlook, although this is unlikely to fundamentally alter the course of the ECB policy for the time being.

Market news and trading strategies by MyFXspot.com - fundamental support for traders
Black Friday offer - forex subscription 25% off