US: Shutdown reduces dataflow, while households respond to lower mortgage rates – ABN AMRO

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Han de Jong, chief economist of ABN AMRO, points out that the flow of economic data from the US is currently reduced as the statisticians from the Bureau of Economic Analysis are not in work.

Key Quotes

“They are among the 800,000 or so government workers affected by the shutdown. The statisticians elsewhere (the Fed, the Bureau of Labour Statistics and private data gatherers) are not affected, so some data is still being produced.”

“Recent days have seen the ISM for the non-manufacturing sector decline from 60.7 in November to 57.6 in December. That is quite a drop, but still a decent level. Business confidence among SMEs eased a little, but is still robust (104.4 in December, down from 104.8). Perhaps the most interesting piece of economic US data of the last couple of days relates to mortgage applications. This is a weekly series and can be volatile.”

“Mortgage applications rose 23.5% in the week to 4 January, after a 8.5% drop in the previous week. These numbers may be affected by calendar effects. But what is interesting is that the subindex of ‘refinancings’ was the main driver. The sharp increase in the latest week is still modest in a historical perspective, but it suggests that households are very alert and respond quickly to lower mortgage rates. This improves their financial situation which isn’t bad to begin with.”