Best Financial Markets Analysis Article The survey of The National Association of Home Builders for January indicates stalled home building activity in January (see Chart 1). For three straight months the composite index has held at 16. The index measuring traffic of prospective buyers moved up slightly (12 vs. 11 in January), while the index tracking current sales has held steady for four months at 16.

Housing starts for December are scheduled for publication on January 19, following a 3.9% increase to an annual rate of 555,000 in November. The decline in permit extensions in November, the labor market situation and this survey suggest that housing starts probably failed to grow in December.

New York Factory Survey Is Upbeat, Will 2011:Q1 Factory Production Surpass That of 2010:Q4?

The Empire State Manufacturing survey reports an improved in activity in the regional factory sector. The composite index rose to 11.9 in January vs. 9.9 in the prior month. More importantly, indexes tracking new orders (12.4 vs. 2.03 in December) and the shipments index (25.4 vs. 7.2 in December) also advanced.

Overall factory production of the nation during the fourth quarter posted a 3.4% annualized gain vs. a 4.5% increase in the third quarter (see Chart 4), indicative of a decelerating trend. Is this the first report of stronger factory conditions across the nation in January?

Asha Bangalore — Senior Vice President and Economist

http://www.northerntrust.com

Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.

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