US sees rise in loan defaults
A MEASURE of the US economy’s prospects scaled a one-and-a-half-year high in August but a record rise in home loan defaults cast doubts on the durability of the recovery.
The Conference Board yesterday said its index of leading economic indicators rose 0.6 per cent to 102.5, the highest level since January 2008. It had advanced 0.9 per cent in July.
It was the fifth straight month that the gauge, which is supposed to forecast economic trends six to nine months ahead, had increased. The gain was a touch below the 0.7 per cent rise economists had forecast. The index has risen 4.4 per cent during the past six months.
“These data add further evidence to the growing view and our long-held belief that the official end date of the recession is likely to be sometime in the third quarter,” said Michelle Girard, an economist at RBS.
However, separate monthly data from credit bureau Equifax showed a record 7.58 per cent of US homeowners with mortgages were at least 30 days late on payments in August, up from 7.32 per cent in July.
US financial markets were mute to the data and analysts said investors were awaiting the outcome of the Federal Reserve’s two-day policy meeting today and tomorrow.
US dollar strength ahead of the Fed meeting weighed on commodity prices and took some shine off stocks on Wall Street.
The Fed is expected to leave benchmark overnight lending rates unchanged near zero, but the statement accompanying the rate decision will be scrutinised for clues as to when the US central bank will start withdrawing some of the support it is lending to the economy.