Our comments and preview on economic data due for release over the next week
New home sales (Tuesday 24th) – After the strong volatility in the last two months (-13.5% m/m in February and +11.1% m/m in March) we expect new home sales to remain almost unchanged in April, edging down to 295k. The data should remain close to the historical low of 270k posted in February, confirming that the housing sector is still very weak, with a strong recovery not expected in the short term.
Durable goods orders (Wednesday 25th) – Durable goods orders rose by un upward revised 4.1% m/m in March thanks to the strong increase in transportation orders. However ex-transportation figure also rose by a strong 2.3% m/m (revised from 1.3% m/m), indicating that the short term industrial production outlook remains positive. In April total durable goods orders are likely to decline (-1.5% m/m) as aircraft orders are likely to correct the last months jump. Durable goods orders ex-transportation are likely to extend the March increase rising by 0.9% m/m. The data should add to evidence that industrial production is likely to continue growing at a healthy pace in the short term.
Gross Domestic Product (Thursday 26th) – The preliminary version of the Q1 ’11 GDP figure is likely to see an upward revision from 1.8% to 2.2% annualized, led by better than previously estimated contribution from fixed investments and inventories. Instead net trade is likely to see its negative contribution slightly rising after a worse than expected trade deficit in March. Q1 ’11 GDP data is likely to strengthen the view that U.S. economy will grow at moderate pace in the next few quarters: our estimate is GDP to expand by 2.7% in 2011.
Personal spending (Friday 27th) – In line with indications coming from retail sales, personal spending is expected to increase at a moderate pace in the short term: our estimate is for a 0.5% m/m and 5.2% y/y increase. In real terms, personal spending should expand by 0.2% m/m as the recent CPI increase will take its toll on consumer attitude. Despite the improvement in labour market in early 2011, consumer spending is likely to continue growing at a moderate pace in the short term, in line with indications coming from the consumer confidence indices.
Pending home sales (Friday 27th) – Pending home sales rebounded by 5.1% m/m in March after a very weak start to the year. However, we do not expect the housing market to strengthen markedly in the short term despite the improvement in the labour market. For this reason pending home sales are likely to correct by 1% m/m in April, signalling that the housing market may continue at a subdued level for the foreseeable future.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
