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Sunday, July 22, 2018

Economics News Week Ahead

Fedspeak is on hold ahead of the following week's FOMC meeting which puts the focus on Friday's GDP report. A 4.2 percent growth rate is Econoday's call with consumer spending seen picking up sharply to a 2.9 percent rate. Narrowing in the net export deficit is seen as another major plus in data that will offer new talking points for the trade dispute. The national activity index opens the week on Monday, where housing may be a negative, followed later in the morning by existing home sales which are not expected to show much momentum. More housing data follow on Tuesday with the FHFA house price index, which has turned flat, followed by new home sales on Wednesday which have been the sector's key area of strength. Durable goods orders are Thursday's highlight and a big rebound in aircraft orders is expected to lift the headline sharply for a factory sector that, despite price and supply dislocations, is approaching double-digit growth.


Monday


National Activity Index for June
Consensus Forecast: 0.23
Consensus Range: 0.10 to 0.40


A big jump in industrial production together with strength in employment should offset trouble in the housing sector, making for a plus 0.23 consensus in the national activity index for June, which would be up from minus 0.15 in May.


Existing Home Sales for June
Consensus Forecast, Annualized Rate: 5.450 million
Consensus Range: 5.350 to 5.520 million


Existing home sales have been soft this Spring selling season, coming in below Econoday's consensus range in April and May. But the number of homes on the market has been on the rise which should help sales in June. But forecasters aren't calling for much strength, at a consensus 5.450 million annualized rate in June vs 5.430 million in May.


Tuesday


FHFA House Price Index for May
Consensus Forecast, Month-to-Month Change: 0.4%
Consensus Range: 0.1% to 0.5%


Home prices have been cooling along with sales and are part of the cracks appearing in the housing sector. The FHFA house price index has managed only very small gains the past two reports though a better gain, at 0.4 percent, is the consensus for May.


PMI Composite for July, Flash
Consensus Forecast: 56.3
Consensus Range: 54.3 to 56.5


PMI Manufacturing
Consensus Forecast: 54.9
Consensus Range: 54.7 to 55.0


PMI Services
Consensus Forecast: 56.4
Consensus Range: 54.2 to 56.8


Moderate-to-strong growth has been the signal from the PMIs with manufacturing reaccelerating a bit in late June. The flash July consensus for the PMI composite is 56.3 with PMI manufacturing seen at 54.9 and PMI services at 56.4.


Wednesday


New Home Sales for June
Consensus Forecast, Annualized Rate: 669,000
Consensus Range:  590,000 to 685,000


New home sales have been the backbone for what is otherwise a mixed housing sector. Econoday's consensus for June new home sales is 669,000 vs 689,000 in May, a month when sales got a boost from lower prices.


Thursday


Durable Goods Orders for June
Consensus Forecast, Month-to-Month Change: 3.2%
Consensus Range: 0.5% to 5.0%


Durable Goods Orders, Ex-Transportation
Consensus Forecast: 0.5%
Consensus Range: 0.0% to 0.8%


A pent-up surge in aircraft orders is expected to make for a big bounce higher in durable goods orders where the consensus for June is a 3.2 percent gain vs May's 0.6 percent decline. But strength elsewhere is expected to be more limited with the ex-transportation consensus at a 0.5 percent gain. May's data included slowing in orders for steel and aluminum which spiked in March and April following the imposition of import tariffs.


International Trade In Goods for June
Consensus Forecast, Month-to-Month Change: -$67.2 billion
Consensus Range: -$69.2 to -$65.0 billion


The goods deficit is expected to widen to a consensus $67.2 in June vs an unexpected low $64.8 billion in May. June's report will update progress on second-quarter net exports and offer the latest on the bilateral deficit with China.


Advance Wholesale Inventories for June
Consensus Forecast, Month-to-Month Change: 0.3%
Consensus Range: 0.3% to 0.4%


Wholesale inventories are expected to rise 0.3 percent in June vs 0.6 percent in May. Inventories have been low relative to sales.


Initial Jobless Claims for July 21 week
Consensus Forecast: 217,000
Consensus Range: 215,000 to 220,000


Initial claims are expected to come in at 217,000 in the July 21 week vs 207,000 in the prior week which was the lowest since December 1969. Other readings in this report are also at or near historic lows and consistent with strong demand for labor.


Friday


Real GDP: 2nd Quarter, 1st Estimate, Annualized Rate
Consensus Forecast: 4.2%
Consensus Range: 3.0% to 4.8%


Real Consumer Spending, Annualized Rate
Consensus Forecast: 2.9%
Consensus Range: 2.3% to 3.2%


GDP Price Index
Consensus Forecast: 2.2%
Consensus Range: 1.5% to 2.5%


The first estimate for second-quarter GDP is expected to come in at a very strong 4.2 percent annualized rate vs the first quarter's mediocre 2.0 percent. Consumer spending is seen rising at a 2.9 percent rate vs the prior quarter's very soft 0.9 percent. A significant narrowing in the net export deficit and another rise for business investment are also expected to be positives. The GDP price index is seen at 2.2 percent, unchanged from the first quarter.


Consumer Sentiment Index, Preliminary July
Consensus Forecast: 97.2
Consensus Range: 97.1 to 98.5


The consumer sentiment index has been easing back and not much of a rebound is expected for the preliminary July reading, at a consensus 97.2 vs 97.1 in June.

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