Economic Indicators on October 18, 2010

1. Industrial Production Index

The index came in lower than expected. Production declined by 2% in September versus an increase of 2% in August. It is much lower than the consensus of an increase of 2%. Capacity utilization was 78.7%, slightly lower than 78.8% in August and the consensus view of 78.8%

Industrial Production Index shows how much manucturing segments such as factories, mines and utilities are producing. Although the manufacturing sector carriess less than 20 percent of economic activities, it accounts for most of its cyclical variation. Consequently, this report has a big influence on market behavior.

2. Housing Market Index

The housing market index is a weighted average of separate diffusion indexes: present sales of new homes, sale of new homes expected in the next six months, and traffic of prospective buyers in new homes.

In Wall Street Journal

The housing market index rose three points in October to 16, a gain led by the expectations component yet also including gains for current sales and for traffic. Gains were also posted across regions. The report said financing remains scarce for both buyers and builders. The housing sector has been regaining its feet though the prospect of a foreclosure moratorium obscures the outlook. Housing starts will be posted tomorrow.