Steady inflation and positive economic data boosts US hopes

Julian Harris
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AMERICAN investors were given a brief respite from the US debt ceiling row yesterday, as fresh data revealed steady inflation, high home-builder morale and a rise in industrial output.

US consumer prices stayed flat in December, the Labor Department said, potentially giving the Federal Reserve scope to continue its ultra-loose monetary policies.

The consumer price index was unchanged in‚ÄąDecember. Over the previous year, prices were up just 1.7 per cent – compared to 1.8 per cent in the 12 months to November.

The Fed announced towards the end of last year that it would keep interest rates at historically low levels until the jobless rate falls to 6.5 per cent – so long as it foresees inflation staying below 2.5 per cent.

Separate data also revealed yesterday that US industrial output rose 0.3 per cent last month. In November output was also up, by one per cent.

The fourth quarter boost to US industry supports hopes that it is not being affected too severely by the slowdown in global demand.

Meanwhile, a widely-regarded survey of sentiment among home-builders showed that confidence has held at a near seven year high.

The National Association of Home Builders (NAHB) said that its index remained at 47 this month – the same level that it ended 2012. The index climbed for eight consecutive months to December, suggesting some recovery in America’s housing market.