Next week, we expect that economic indicators for the most part will have a positive spin. July single-family housing starts and permits are expected to move up, producer prices should decline, the Conference Board’s leading indicator should ramp up further, and existing home sales are expected to float over the 5-million-unit mark.

KEY U.S. DATA RELEASES THIS WEEK

Tuesday, August 18 – Housing Starts and Building Permits (Jul.)

Starts

• IHS Global Insight: 0.598 Mil.
• Consensus: 0.598 Mil.
• Last Actual: 0.582 Mil. (Jun.)

Permits

• IHS Global Insight: 0.578 Mil.
• Consensus: 0.575 Mil.
• Last Actual: 0.570 Mil. (Jun.)

What to Look For

• We project a modest increase in overall starts (up 2.7%) and permits (up 1.4%).

Implications

Builders have pared back on inventory, and are starting to build new homes. Therefore, we expect another steady improvement in single-family starts and permits for July. The market for multiple-family homes is still slumping, however, and July's numbers will reflect this fact. This market will not improve until credit conditions in the market for commercial real estate loans improve.

Tuesday, August 18 – Producer Price Index (Jul.)

Total

• IHS Global Insight: -1.0%
• Consensus: -0.3%
• Last Actual: +1.8% (Jun.)

Core

• IHS Global Insight: -0.1%
• Consensus: +0.1%
• Last Actual: +0.5% (Jun.)

What to Look For

• The overall producer price index should fall 1.0% in July.
• The core index is expected to decline by 0.1%.

Implications

Falling energy prices, most notably a seasonally adjusted 13% slump in gasoline prices, are driving the decline. Food prices will likely drop as well, adding further downward pressure to the index. We expect the core producer price index to decline 0.1%, showing no inflation pressure on finished goods prices.

Thursday, August 20 – Conference Board Leading Indicator (Jul.)

• IHS Global Insight: +0.8%
• Consensus: +0.7%
• Last Actual: +0.7% (Jun.)

What to Look For

• The Conference Board’s Leading Economic Index should surge 0.8% in July, its fourth solid increase in succession.

Implications

The interest rate spread continues to provide the largest positive contribution, a situation that is unlikely to change anytime soon with short-term rates so low. Improvement in the labor market, i.e., falling initial claims and rising weekly hours, provided most of the remaining thrust. But weaker consumer confidence prevents a more robust gain.

Friday, August 21 – Existing Home Sales (Jul.)

• IHS Global Insight: 5.01 Mil.
• Consensus: 5.00 Mil.
• Last Actual: 4.89 Mil. (Jun.)

What to Look For

• Existing homes sales are expected to move up by 2.5%.

Implications

The Pending Home Sales Index increased 3.6% in June. Based on this, we project that existing home sales will climb 2.5% in July, breaching the 5-million-unit mark for the first time in nine months.