US housing and consumer goods sales rose 'BC' (before crunch)

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They call it "BC" data - before crunch. The fragility of the credit market and continuing worries haunting recovering equity markets have been so dramatic that economists have tended to divide economic news into two time periods, divided by the gyrations on the world's exchanges.

Yesterday's strong American housing data falls into the BC category, relating as it does to US home sales during July. New single-family home sales rose by 3 per cent in July to 870,000 at a seasonally adjusted annualised rate, up from a revised 846,000 rate in June.

Expectations had been for a slide to 835,000, in line with the continuing property market slump, a factor in prompting the sub-prime mortgage saga. However, this particular indicator is traditionally a rather erratic number and is prone to revisions, so it may do no more than indicate things aren't getting radically worse for American homeowners.

Wall Street was boosted by the news, rising 1.1 per cent. Todd Clark, managing director of stock trading at Nollenberger Capital Partners, in San Francisco, said: "The stronger than expected new home sales are definitely a good data point, particularly given the gloom and doom people are hearing about the housing sector,"

But the implications of the data were clear to market commentators. "With population growth slowing since the 1990s and divorce rates falling, there is little reason to expect a strong upward trend in the rate of sales growth," said Richard Iley of BNP Paribas. "The hugely inflated rates of sales growth that prevailed between 2000-2005 - more than double their long-run average - are largely the counterpart to the unsustainable ramping up in homeownership rates that the sub-prime crisis makes abundantly clear were wholly unsustainable. Restoring equilibrium will be incredibly painful. Much worse is surely to come, with August's data the first to be impacted by the credit market turmoil."

Some credibility was added to the home sales data when it emerged that consumer durable goods sales in the US were also unexpectedly strong in July. Sales of washing machines, refrigerators and other "big-ticket products" meant to last three years or more leapt by 5.9 per cent compared with June, another small, and not always consistent, indicator that fears of a recession may be overdone, at least "BC".

However, since then, auto makers and others have reported tougher trading conditions.