General: Economic data in January seemed to confirm that the US may be close to a recession or could have entered one already. The exceptionally slow growth in Q4 certainly points in that direction. To fight this downturn, the US Federal Reserve dramatically cut the benchmark interest rate twice since the beginning of the year (0.75% and 0.50% for a total reduction of 1.25%) and US Congress passed a stimulus package. Non-farm payrolls fell by 17,000 in January and the service sector index contracted for the first time since 2003 (from 54.4 in December to 41.9 in January). There were a few bright spots however. Unemployment slightly fell and Durable Goods orders grew an unexpected 5.2 percent in December. The overall productivity grew 1.8 percent in Q4, a substantially lower deceleration than expected. For the year, productivity grew 1.6 percent. Alas, the housing industry has no good news to offer.
GDP: +2.2% in 2007 (+2.9% in 2006), +0.6% in Q4
Consumer Prices: +4.1% in December 2007
Industrial Production: +1.5% in December 2007
Purchasing Managers Index (PMI): 50.7 in January, up from 48.4 in December
Producer Prices: - 0.1% in December 2007
Consumer Confidence Index: 87.9 in January, down from 90.6 in December
Unemployment: 4.9% in January
Trade Balance: -$813.0 billion in November 2007 for the past twelve months
Housing Industry: Housing starts in December fell 14.2% compared to November and 38.2% compared to the year before. Housing permits decreased 8.1% in December from the previous month and 34.4% compared to December 2006. Sales of existing homes fell 4.7% in December to a seasonally adjusted annual rate of 604,000. This is the lowest mark in twelve years. Home prices in November fell for the 11th consecutive month.
Automotive Production: 840,090 units were produced in January, 1.9% less than January 2007. The downward trend for medium and heavy trucks continued unabated in January. Production for this segment fell to 19,135 units or 39.1% less than January 2007. Last year production for medium/heavy trucks declined 39.6% compared to 2006.
Steel Production: 97.2 million mt were produced in 2007, a slight decline of 1.4% over 2006.
Currency: 1 US$ = 0.68 Euro as of February 6 (0.77 last year - a decline of 13.2%)