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November 18, 2014

6 U.S. Economic Indicator To Watch This Week

By Leigh Drogen, Benzinga

This week we will receive a flood of US economic data.

Just Monday morning, US Industrial Production reported a month over month (MoM) decrease of 0.11 percent in October, missing the Estimize consensus for an increase of 0.23 percent.

Weakness was seen in mining, which fell 0.9 percent after a 1.6 percent boost in September, and utilities, which slipped 0.7 percent after surging 4.2 percent in September.

Manufacturing growth remained respectable, increasing 0.2 percent during the month.

Also out this week:

Producer Price Index (PPI)
On Tuesday we will get a read on inflation when October results are released for the Producer Price Index.

While the Consumer Price Index (which reports Thursday) is seen as the most important measure of inflation because of its impact on setting interest rates, the PPI provides an earlier look by monitoring price pressures that are in the pipeline.

These changes in price often trickle down to the consumer.

The Estimize community is expecting the index to show a decline 0.03 percent for the month of October, after a decline of 0.09 percent in September.

US Housing Starts

The most closely followed report on the US housing market releases October results on Wednesday.
This indicator is important because it indicates the beginning of intended residential construction and reflects the commitment and optimism of builders.

This indicator also has a high multiplier effect, as purchases of household furnishings and appliances quickly follow, a trend we've seen these last few months as home improvement stores have done very well in the third quarter earnings season.

For October, Estimize is expecting Housing Starts to increase 0.42 percent MoM, this is on top of the 6.27 percent in September and the -12.84 percent in August. This data has run very hot and cold the last couple of months, on Wednesday, we'll be looking for signs of stability.
Consumer Price Index (CPI)

The Consumer Price Index is the mostly widely followed inflation indicator.

The Estimize community is looking for CPI to show a decrease of 0.1 percent in October, in-line with the slight decline expected for PPI. The index increased 0.09 percent in September.

There is no doubt that this expected decrease is due to the steep decline in energy prices, with gasoline at a four year low and more than able to offset the rising cost of food, particularly meat, dairy and grains.
Existing Home Sales
Existing Home Sales will also report on Thursday, another significant gauge of the housing sector as existing homes account for a larger share of the market than new homes.

Like Housing Starts, this data also exhibits a large ripple effect, particularly amongst home improvement retailers.

For October, the Estimize community is expecting Existing Home Sales to hit 5.15M, which would show a detraction of -0.38 percent MoM, after September increased 2.38 percent to 5.17M.
Philly Fed Manufacturing Activity Index
The Philly Fed's Survey on manufacturing conditions is out Thursday; this reading is highly correlated with the ISM Manufacturing Index and the Index of Industrial Production which showed a decline when results were released earlier this morning.

The Estimize consensus for the Philly Fed index is -0.83 percent MoM for October, on top of an 8 percent decline in September.
Initial Jobless Claims
Jobless claims are anticipated to come in at 280,049 this week, down 3.34 percent from last week which posted an increase of 4.32 percent.

In the last 8 weeks, jobless claims have risen 4 times and fallen 4 times, a sign that the US employment situation, although making great strides, is still not sturdy.

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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