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Housing market is still one of the brightest spots of the US economy – CNN

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A healthy job market and low mortgage rates have made homes more affordable for many consumers, although values crept steadily higher throughout 2019.
In October, housing prices rose 3.3% annually, according to the most recent S&P CoreLogic Case-Shiller US National Home Price NSA Index, which came out last month. Phoenix, Tampa and Charlotte posted particularly strong gains.
And homebuilder Lennar reported solid fourth quarter earnings Wednesday, citing healthy demand across the country.
In a conference call with analysts, Lennar executive chairman Stuart Miller said that results were good despite “the constant noise from the current election cycle” and “global tensions.”
“The indicators that we see from our customers reflect confidence in the stability of the economy and in the job market,” Miller added. “The housing market is strong.”
America's housing market is coming back to life just in time to boost the 2020 economy
Shares of Lennar (LEN) rose about 1% on the news Wednesday. The stock enjoyed a 40% gain in 2019. That’s in line with the increase for the S&P Homebuilders ETF (XHB) — a fund that owns big builders, home improvement retailers Home Depot (HD) and Lowe’s (LOW) and suppliers like Owens Corning (OC) and Whirlpool (WHR).
KB Home, (KBH) another builder whose stock soared nearly 75% last year, will report its latest results after Thursday’s closing bell. Analysts are expecting a 19% jump in sales and 34% surge in earnings per share.
Three interest rate cuts by the Federal Reserve last year have underpinned some of the housing market’s recent strength as well, said Michael Bapis, a managing director for Vios Advisors at Rockefeller Capital Management.

Rates unlikely to spike higher anytime soon

According to Freddie Mac, the average rate for a 30-year fixed mortgage is now 3.72%. That’s down from 4.51% at the same time a year ago.
“Low rates have helped the housing recovery. Unemployment is low and you are starting to see more wage growth. So housing may still have more room to grow,” Bapis said.
The combination of cheap mortgages, a healthy consumer and booming demand for new homes is a recipe for continued success this year.
Will the housing market continue to prop up the US economy?Will the housing market continue to prop up the US economy?
“Home builder confidence rose to a new high in December, while new home sales hit the highest level since 2007,” Brad McMillan, chief investment officer at Commonwealth Financial Network, said in a report this week. “Housing is a significant indicator of consumer willingness to spend, and this recovery is a positive indicator for 2020.”
The housing boom should be good news for financial service stocks as well, said Chris Gaffney, president of world markets at TIAA Bank. Gaffney told CNN Business that lenders should benefit from low interest rates and resilient consumers that will continue to need mortgages.
That could lead to greater consumer confidence and overall spending as long as home sales and home prices keep climbing.
“Housing is important for consumer psychology since homes make up the bulk of most people’s wealth, not stocks,” said Scott Clemons, chief investment strategist with Brown Brothers Harriman. “Housing can continue to be a tailwind for the economy.”

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Canada criticizes proposed U.S. EV tax credit, says could harm auto sector

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The Canadian government on Friday warned that U.S. Legislative proposals to create new electric vehicle tax credits for American-built vehicles could harm the North American auto industry and run afoul of trade agreements, according to a letter seen by Reuters.

Canadian Trade Minister Mary Ng told U.S. lawmakers proposed credits if approved “would have a major adverse impact on the future of EV and automotive production in Canada, resulting in the risk of severe economic harm and tens of thousands of job losses in one of Canada’s largest manufacturing sectors. U.S. companies and workers would not be isolated from these impacts.”

 

(Reporting by David Shepardson in Washington and David Ljunggren in Ottawa; Editing by Chris Reese)

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Economy

Province Invests in Midland Automotive Parts Manufacturer to Boost Local Economy | Ontario Newsroom – Government of Ontario News

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Province Invests in Midland Automotive Parts Manufacturer to Boost Local Economy | Ontario Newsroom  Government of Ontario News



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UK's economy gathers speed, inflation pressures mount – PMIs – Financial Post

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LONDON — Britain’s economy unexpectedly regained momentum in October and cost pressures rose by the most in more than 25 years, according to a survey on Friday that could encourage the Bank of England to raise interest rates for the first time since the pandemic.

The preliminary “flash” IHS Markit/CIPS flash Composite Purchasing Managers’ Index rose by the largest amount since May to hit 56.8 from September’s 54.9. By contrast, a Reuters poll of economists had pointed to a further slowdown to 54.0.

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“The UK economy picked up speed again in October, but the expansion is looking increasingly dependent on the service sector, which in turn looks prone to a slowdown amid the recent rise in COVID-19 cases,” said IHS Markit’s chief business economist, Chris Williamson.

The rise in the PMI was driven by Britain’s services firms as consumers and businesses picked up their spending. Travel firms benefited from a relaxation of COVID-19 travel rules.

Service sector activity outpaced manufacturing output by the widest margin since 2009 as factories struggled again with shortages of supplies and staff and recorded barely any growth.

A rise in overall employment was close to August’s record high, despite problems in filling vacancies.

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Higher wages and the worsening supply shortages resulted in the fastest increase in average costs since the combined composite index was launched in January 1998. Separate PMIs for the services and manufacturing sectors showed prices charged by firms rose by the most since these series began in 1996 and 1992 respectively.

With inflation set to hit more than double its 2% target soon, the BoE is expected to raise borrowing costs soon as it tries to make sure that rising inflation expectations do not become embedded in British businesses’ pricing decisions.

The Confederation of British Industry said on Thursday that manufacturers were raising prices by the most since 1980 in the face of some of the biggest increases in costs and labor shortages since the 1970s.

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The PMI for the services sector rose to 58.0, its highest in three months, while the manufacturing PMI’s output component – which IHS Markit says currently gives a better picture of the sector than the headline index – sank to its lowest since February at 50.6.

Despite the improved picture for most companies, many consumers are concerned about the outlook for the economy.

A survey published earlier on Friday showed Britons were their most downbeat since they February, when they were under lockdown, and are increasingly worried about the year to come as prices and COVID cases rise. (Reporting by William Schomberg; Editing by Hugh Lawson)

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