US housing market continues to weaken. New US home sales fell in July for the sixth time this year to the slowest rate since early 2016, extending a months-long stint of weakness in the housing market pushed by rising interest rates and falling demand. Sales of newly constructed homes fell by 12.6 percent, compared to June and were down 29.6 percent from the same month last year, a joint report from the US Department of Housing and Urban Development and the US Census Bureau showed. Meanwhile, the stock of new houses for sale continued to rise, increasing by 7,000 to an estimated 464,000— which would mean it would take about 10.9 months to sell off the inventory of existing homes—the biggest surplus since April 2009, according to Ian Shepherdson, chief economist at Pantheon Macro.

Eurozone PMI hints at a eurozone economy in contraction. European business activity declined for a second consecutive month in August, as a consequence of high energy prices. The closely-watched eurozone composite Purchasing Managers Index (PMI), a gauge of activity in both the manufacturing and services sectors, fell to an 18-month low of 49.2 in August. The data suggest the eurozone economy is shrinking at a rate of 0.5percent to one percent during the current quarter. The weak PMI implies a higher probability that the eurozone economy is heading towards a recession quite rapidly if it’s not already there. Meanwhile, weaker demand is leading inflationary pressure lower although this is counterbalanced by soaring energy costs.

German recession looms as business confidence slumps to two-year low. Germany's business confidence weakened for the third consecutive month in August to the lowest level since mid-2020, signalling that the economy is entering a recession, survey results from the Ifo Institute showed on Thursday. The survey’s measure of business expectations for the next six months notched down to 80.3 from 80.4 in July, although economists had predicted a steeper fall. Current conditions were also assessed more negatively, although other data showed that the country’s economic resilience was better that expected in the past quarter. Klaus Wohlrabe, a senior economist at the Munich-based think-tank said “he expects gross domestic product to fall by around 0.5 percent in the current quarter, after narrowly avoiding a contraction in the second quarter.

UK inflation to top 18 percent in early 2023 as gas prices surge, Citi warns. On Monday, an economist at US bank Citi said that British consumer price inflation is set to peak at 18 percent — nine times the Bank of England's target — by early 2023, ,increasing his forecast once again on the heels of the latest surge in energy prices. Citi said inflation, which was seen to be exorbitant in July, at 10.1 percent, will be "entering the stratosphere" early next year. The forecast follows another prognosis by think tank Resolution Foundation who said that it will hit 18.3 percent next year. With inflation now set to peak substantially higher, the Bank of England, which sets UK interest rates, was likely to conclude that the risks of more persistent inflation had intensified, Citi said.

China cuts prime rate to revive housing market. China has slashed its mortgage lending rate for the second time this year as the country’s central bank seeks to limit the fallout from a liquidity crisis in the real estate sector. The People’s Bank of China on Monday lowered its one-year loan prime rate (LPR) by five basis points to 3.65 percent at the central bank’s monthly fixing, while the five-year LPR was cut by 15 basis points to 4.30 percent. Iris Pang, Greater China chief economist at ING Bank, said the moves are part of a wider effort to shore up the property market.