US housing starts, permits post unexpected jump

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<TABLE cellSpacing=0 cellPadding=0 width=452 border=0><TBODY><TR><TD vAlign=top width=452 colSpan=2>March 17, 2009, 9.01 pm (Singapore time)

</TD></TR><TR><TD vAlign=top width=452 colSpan=2>US housing starts, permits post unexpected jump

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WASHINGTON - US home construction starts and permits posted a surprise jump in February from 50-year low levels in a positive sign for the moribund home market at the epicentre of global financial crisis.

Housing starts - or privately owned new homes on which construction has started - soared 22.2 per cent to a seasonally adjusted annual rate of 583,000 units after seven months of decline, the Commerce Department said.
It was much higher than the revised January estimate of 477,000 and consensus forecast of 450,000.
Permits to build new homes, an indicator of future activity in the housing sector, rose 3 per cent to a seasonally adjusted annual rate of 547,000 in February, the department said.
It was above the revised January rate of 531,000 and consensus forecast of 500,000.
A home mortgage meltdown triggered financial turmoil and plunged the world's biggest economy into recession in December 2007.
Starts and permits were at their lowest pace in January since the Commerce Department began tracking the data in 1959. -- AFP

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Golden Period is BACK! *hee*hee*​

 

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<TABLE cellSpacing=0 cellPadding=0 width=452 border=0><TBODY><TR><TD vAlign=top width=452 colSpan=2>March 17, 2009, 7.01 am (Singapore time)

</TD></TR><TR><TD vAlign=top width=452 colSpan=2>US credit card defaults rise to 20 year-high
* AmEx and Citi perform worse-than-expected: analysts
* JPMorgan and Capital One outperform expectations
* Default rates seen over 10% by year-end

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NEW YORK - US credit card defaults rose in February to their highest level in at least 20 years, with losses particularly severe at American Express Co and Citigroup amid a deepening recession .

AmEx, the largest US charge card operator by sales volume, said its net charge-off rate - debts companies believe they will never be able to collect - rose to 8.70 per cent in February from 8.30 per cent in January.
The credit card company's shares wiped out early gains and ended down 3.3 per cent as loan losses exceeded expectations.
Moshe Orenbuch, an analyst at Credit Suisse, said American Express credit card losses were 10 basis points larger than forecast.
In addition, Citigroup Inc - one of the largest issuers of MasterCard cards - disappointed analysts as its default rate soared to 9.33 per cent in February, from 6.95 per cent a month earlier, according to a report based on trusts representing a portion of securitised credit card debt.
'There is a continued deterioration. Trends in credit cards will get worse before they start getting better,' said Walter Todd, a portfolio manager at Greenwood Capital Associates.
US unemployment - currently at 8.1 per cent - is seen approach 10 per cent as the country endures its worst recession since World War Two, leaving more than 13 million Americans jobless, according to a Reuters poll of economists.
However, not all were bad surprises. JPMorgan Chase & Co and Capital One reported higher credit card losses, but they were below analysts expectations.
Chase - a big issuer of Visa cards - reported its charge-off rate rose to 6.35 per cent in February from 5.94 percent in January. The loss rate for the first two months of the quarter is 126 bps from the previous quarterly average compared to an estimate of a 145 bp increase, Orenbuch said.
Capital One Financial Corp's default rate increased to 8.06 per cent in February from 7.82 per cent in January.
More pain ahead
Analysts estimate credit card chargeoffs could climb to between 9 and 10 per cent this year from 6 to 7 per cent at the end of 2008. In that scenario, such losses could total US$70 billion to US$75 billion in 2009.
'People underestimated the severity of the downturn we are experiencing and I wouldn't be surprised to see them north of 10 per cent,' said Mr Todd, who added American Express was most exposed to higher credit card losses, given its sole reliance on the industry.
Credit card lenders are trying to protect themselves by tightening credit limits, rising standards, and closing accounts. They have also been slashing rewards, raising interest rates and increasing fees to cushion further losses.
Meredith Whitney, one of Wall Street's best known and most bearish bank analysts, estimates that Americans' credit card lines will be cut by US$2.7 trillion, or 50 per cent, by the end of 2010 - and fewer Americans will be offered new cards.
'We believe that the US credit card industry will feel additional credit pain over the next 12-18 months. Until lenders like Capital One show stabilisation, followed by trend-bucking improvement over a several-month period, we will continue to remain bearish on credit card lenders,' said John Williams, an analyst at Macquarie Research.
Mr Todd said credit card issuers shares - which are down up to 60 per cent in 2009 - will remain under pressure until the end of 2009, or early next year, when bad loans could start to redeem. -- REUTERS
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