Business activity cooled in the US in January on slower orders
BUSINESS activity in the US cooled in January as orders and employment slowed, indicating that last quarter's pickup in growth will not be sustained into 2012.
The Institute for Supply Management-Chicago said yesterday that its business barometer declined to 60.2 from 62.2 in December.
Readings above 50 signal growth. Economists forecast the gauge would rise to 63, according to the median of 57 estimates in a Bloomberg survey.
Three consecutive readings exceeding 60 are still the strongest since early 2011, signaling manufacturing remains a mainstay of the expansion even as the world's largest economy decelerates.
Nonetheless, the risk of a recession in Europe prompted by its debt crisis and slower growth in some emerging markets pose a risk to export growth.
"We're still getting off to a healthy start, benefiting from moderate growth in US demand," Richard DeKaser, deputy chief economist at Parthenon Group in Boston, said of the report. He projected the index would drop to 59.
"The urgency to rebuild inventories has faded even as demand is still solid."
Economists' projections in the Bloomberg survey ranged from 59 to 67.
Another report yesterday showed residential real estate prices fell more than forecast in November, showing distressed properties are hampering improvement in the housing market.
The S&P/Case-Shiller index of property values in 20 cities declined 3.7pc from November 2010 after decreasing 3.4pc in the year ended in October, the group said yesterday.
Economists projected a 3.3pc drop, according to the median estimate in a Bloomberg survey.
The US home ownership rate fell in the fourth quarter as borrowers lost homes to foreclosure and tight lending standards stalled purchases.
The rate fell to 66pc from 66.3pc in the third quarter, as low as it was in 1998, the Census Bureau said in a report yesterday.
It peaked at 69.2pc in June 2004 and fell to a post-peak low of 65.9pc in the second quarter of last year, according to the report.
"The share of Americans who are willing and able to own their own home is still falling," Paul Diggle, an economist with Capital Economics in London, said yesterday.
"The flipside is more households in the rented sector and fewer properties lacking tenants. This is helping to drive rents, and therefore landlords' returns, higher." (Bloomberg)