Thursday, March 14, 2013

Friday: Industrial Production, CPI, Consumer Sentiment

by Bill McBride on 3/14/2013 07:57:00 PM

First, here is a price index for commercial real estate that I follow. CoStar reported that their value weighted index is up 4.8% year-over-year, and the equal weighted index is up 5.5% from January 2012. Also the volume of distressed sales is continuing to decline.

From CoStar: Commercial Real Estate Pricing Levels Off In January Following Year-End Surge

The U.S. Value-Weighted Composite Index, which weights each repeat-sale by transaction size or value (and therefore is heavily influenced by larger transactions), ticked up by 0.7% in January, and has now increased 38% from its trough in 2010. The U.S. Equal-Weighted Composite Index, which weights each repeat-sale by transaction equally (and therefore is heavily influenced by numerous smaller transactions), began 2013 with a 2.9% monthly loss, largely due to a seasonal slowdown in trading activities after the year-end sales surge. However, thanks to its steady recovery throughout 2012, the equal-weighted index has increased 5.5% since January 2012.
Distressed sales as a percentage of total transactions have been following a declining trend since the start of 2011. Although this percentage ticked up in January 2013 due to the seasonal slowdown in total transactions, the number of repeat sales involving distress assets was the lowest in January 2013 since the summer of 2009.
emphasis added
Commercial Real Estate Prices Click on graph for larger image.

This graph from CoStar shows the Value-Weighted and Equal-Weighted indexes. As CoStar noted, the Value-Weighted index is up 38.5% from the bottom (showing the demand for higher end properties) and up 4.8% year-over-year. However the Equal-Weighted index is only up 9.0% from the bottom, and up 5.5% year-over-year.

Note: These are repeat sales indexes - like Case-Shiller for residential - but this is based on far fewer pairs.

Friday economic releases:
• At 8:30 AM ET, the Consumer Price Index for February will be released. The consensus is for a 0.5% increase in CPI in February (due to higher gasoline prices) and for core CPI to increase 0.2%.

• Also at 8:30 AM, the NY Fed Empire Manufacturing Survey for March. The consensus is for a reading of 8.5, down from 10.0 in February (above zero is expansion).

• At 9:15 AM, the Fed will release Industrial Production and Capacity Utilization for February. The consensus is for a 0.3% increase in Industrial Production in February, and for Capacity Utilization to increase to 79.3%.

• At 9:55 AM, the preliminary March Reuter's/University of Michigan's Consumer sentiment index will be released. The consensus is for a reading of 77.5, down from 77.6.