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Sunday, June 13, 2010

Weekly Summary and a Look Ahead

by Calculated Risk on 6/13/2010 11:59:00 AM

Two housing related reports will be released this week: the NAHB builder confidence survey on Tuesday and housing starts on Wednesday.

On Tuesday, the June Empire State manufacturing survey will be released at 8:30 AM. The consensus is for a slight increase from the May reading. Also on Tuesday, the June NAHB homebuilder survey will be released at 10 AM. The consensus is for about the same level as May.

Also on Tuesday, St. Louis Fed President James Bullard will speak on "Getting Serious About Asset Bubbles and Monetary Policy" in Hong Kong at 6:15 AM ET.

On Wednesday, Housing Starts for May will be released at 8:30 AM. The consensus is for a 3.3% decrease to 650K (SAAR) in May from 672K in April. Based on the sharp decline for permits in April, starts might fall even further in May (I'll take the under this month). Also at 8:30 AM, the BLS will release the Producer Price Index (PPI) for May. The consensus is for a decrease of 0.5%.

Also on Wednesday, the MBA will release the mortgage purchase applications index. This has been falling sharply suggesting a sharp decline in home sales after the expiration of the tax credit. And the Federal reserve will release the May Industrial Production and Capacity Utilization report at 9:15 AM. Expectations are for production to increase 1% and capacity utilization to increase to 74.5% (the highest levels since late 2008).

On Thursday, the May Consumer Price Index (CPI) will be released at 8:30 AM. The consensus is for a 0.2% decrease in prices. Also on Thursday, the closely watched initial weekly unemployment claims will be released. Consensus is for a decline to 450K from 456K last week. Also on Thursday, the Philly Fed survey and the Conference Board's index of leading indicators will both be released at 10 AM.

And on Friday, the BLS will release the Regional and State Employment and Unemployment report for May at 10 AM. And of course the FDIC will probably have another busy Friday afternoon ...

And a summary of last week:

  • Retail Sales decline in May

    On a monthly basis, retail sales decreased 1.2% from April to May (seasonally adjusted, after revisions), and sales were up 6.9% from May 2009 (easy comparison).

    Retail Sales Click on graph for larger image in new window.

    This graph shows retail sales since 1992. This is monthly retail sales, seasonally adjusted (total and ex-gasoline).

    The red line shows retail sales ex-gasoline and shows the increase in final demand ex-gasoline has been sluggish.

    Retail sales are up 8% from the bottom, but still off 4.6% from the pre-recession peak.

  • Mortgage Purchase Applications decline 35% over last four weeks

    MBA Purchase Index This graph shows the MBA Purchase Index and four week moving average since 1990.

    The purchase index has collapsed following the expiration of the tax credit suggesting home sales will fall sharply too. This is the lowest level for the purchase index since February 1997. From the MBA:
    “Purchase and refinance applications dropped this week, even after an adjustment for the Memorial Day holiday. Purchase applications are now 35 percent below their level of four weeks ago, as homebuyers have not yet returned to the market following the expiration of the homebuyer tax credit at the end of April,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.
  • Rail Traffic Softens in May

    Rail Traffic The Association of American Railroads reported traffic in May 2010 was up 15.8% compared to May 2009 - and traffic was still 11.8% lower than in May 2008.

    This graph shows U.S. average weekly rail carloads. Traffic increased in 18 of 19 major commodity categories YoY.

    From AAR:
    U.S. railroads averaged 294,758 carloads per week in April 2010 and 288,793 in March 2010. Thus, May 2010’s average was actually down slightly from those months ... One month does not a trend make, but it would obviously be worrisome if the decline continued.
  • Trade Deficit increases slightly in April

    The Census Bureau reports:
    [T]otal April exports of $148.8 billion and imports of $189.1 billion resulted in a goods and services deficit of $40.3 billion, up from $40.0 billion in March, revised. April exports were $1.0 billion less than March exports of $149.8 billion. April imports were $0.8 billion less than March imports of $189.9 billion.
    U.S. Trade Deficit This graph shows the U.S. trade deficit, with and without petroleum, through April.

    The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

    Although both imports and exports were off slightly in April, both have been increasing sharply - but are still below the pre-crisis levels. Once again China and oil are the major contributors to the trade deficit.

  • Other Economic Stories ...

  • From NFIB: Small Business Optimism Increases But Not Enough to Spur Hiring, Capital Spending

  • BLS: Low Labor Turnover, Job Openings Increase in April

  • Fed Chairman Bernanke's testimony before the House Budget Committee: Economic and financial conditions and the federal budget

  • From the Federal Reserve: Beige book "modest" economic growth, "Shadow" inventory of Foreclosed Homes

  • UCLA Anderson Forecast and Ceridian Corporation index using real-time diesel fuel consumption data: PCI Strikes Optimistic Note For U.S. Economy with 3.1 Percent Gain in May

  • From the Financial Times: FBI to target mortgage fraud

  • Manufacturing and Trade Inventory-to-Sales Ratio: Inventory Adjustment Over

  • Unofficial Problem Bank List: 760 Institutions

    Best wishes to all.