Economic Overview

This week, The Economist published an overview of the previous weeks economic headlines. Here are the overviews:

Economic and financial indicators
Home sales in America fell by 1.3% in June, as inventories rose to their highest levels since 1997. Sales of condominiums were particularly slow. The median price for an existing home was $231,000 in June, a 0.9% increase from a year earlier. Although that was the smallest such increase since May 1995, American consumer confidence rose in July, according to the Conference Board.

Britain's GDP grew by 0.8% in the second quarter of 2006, compared with 0.7% in the first. The growth was mostly in services such as distribution, restaurants and financial services. Strong retail sales continued into the summer. Sales volumes were 2.1% higher between April and June than they had been in the previous three months.

Business sentiment in Germany dimmed a little in July, according to the widely watched Ifo index. But its reading of 105.6, down from 106.8 in June, remains strong by historical standards. In France and Italy meanwhile, business confidence diverged. French sentiment improved more than expected in July, according to the French statistics office, INSEE. Businessmen were enthusiastic about the strength of exports. In Italy, however, confidence declined after 13 monthly rises, according to the ISAE research institute.

Nevertheless, the euro-area economy as a whole remains quite healthy, according to the EuroCOIN indicator, a measure of economic activity compiled by the CEPR. Its reading of 0.633 for June, up from 0.617 in May, suggests the economy is growing faster than its long-run trend rate, which it calculates at about 0.5% a quarter.

Australia's consumer prices rose by 1.6% in the second quarter, exceeding forecasts and lifting the annual inflation rate to 4%. The jump in prices makes it likely that the Reserve Bank of Australia will raise interest rates so as to bring inflation back towards its preferred range of 2-3%. The Australian dollar strengthened in anticipation of the possible rate increase.

Annual inflation in Canada slowed to 2.5% in June, with core inflation falling to 1.7%. The Canadian dollar fell on the assumption that the Bank of Canada need not tighten monetary policy much further.

Emerging Market Indicators
Several central banks turned hawkish this week. The Reserve Bank of India raised its key interest rate by a quarter of a percentage point to 6%, because of higher energy prices. Hungary's central bank tightened by half a percentage point to 6.75%, following a quarter-point rise in June.

Strong investment helped South Korea's GDP grow by 5.3% in the year to the second quarter.