Key U.S. Data Releases and Events

Reports next week should have a slightly positive slant in terms of the status of the economy, with a smaller current-account gap in the first quarter and a bounce in May's industrial production. Offsetting this likely positive news, housing activity is expected to have slid further downwards in May, while core producer prices are expected to have risen 0.3% last month as manufacturers tried to pass on price increases connected with higher energy input costs.

KEY U.S. DATA RELEASES THIS WEEK

Tuesday, June 17 – Current-Account Balance (Q1)

Global Insight: -$168.6
Consensus: -$172.0
Last Actual: -$172.9 (Q4)

What to Look For

• We expect the current-account deficit to be little changed from the fourth quarter, at $168.6 billion in the first quarter, or roughly 4.8% of GDP.
• The fourth-quarter deficit was originally announced at $172.9 billion, but is likely to be revised down.

Implications

A rising bill for imported oil is offsetting an improvement in the rest of the current account. The income surplus should increase slightly, as profits from overseas direct investments continue to climb on robust foreign growth and favorable currency translation effects from a declining dollar. Despite the turmoil in the financial markets, there have been no problems funding the U.S. current-account deficit, as long-term capital inflows remained solid in the first quarter.

Tuesday, June 17 – Housing Starts and Building Permits (May)

Starts
Global Insight: 0.967 Mil.
Consensus: 0.980 Mil.
Last Actual: 1.032 Mil. (Apr.)

Permits
Global Insight: 0.937 Mil.
Consensus: 0.955 Mil.
Last Actual: 0.982 Mil. (Apr.)

What to Look For

• Starts dropped about 6% in May, to 967,000.
• Permits are expected to be down 4.6%, to 937,000.

Implications

Inventories of unsold homes remain near record highs, and rising foreclosures are adding to the problem. To reduce inventories, house prices must fall further, and builders must scale back on starting new homes. We think that housing starts will drop another 15–20% before turning around later this year.

Tuesday, June 17 – Producer Price Index (May)

Total
Global Insight: +1.6%
Consensus: +1.0%
Last Actual: +0.2% (Apr.)

Core
Global Insight: +0.3%
Consensus: +0.2%
Last Actual: +0.4% (Apr.)

What to Look For

• Top-level prices likely surged 1.6% in May.
• Core prices up by 0.3%.

Implications

We expect producer prices to surge 1.6% in May, as gasoline prices record their first double-digit percentage gain since November 2007. Natural gas, electricity, and fuel oil prices will also provide substantial upward pressure to the top line. Additionally, food prices should bounce higher, after remaining flat in the previous month. Excluding food and energy, we look for "core" producer prices to rise 0.3%, after a 0.4% April rise.

Tuesday, June 17 – Industrial Production (May)

Global Insight: +0.2%
Consensus: +0.1%
Last Actual: -0.7% (Apr.)

What to Look For

• Industrial production to creep 0.2% higher in May.

Implications

We expect a rebound in motor vehicle output, plus a minor recovery in production excluding vehicles, to raise manufacturing output by 0.3% in May. The utility sector was likely unchanged, as weather would have done little to boost demand, but the mining sector should suffer from a full month of lost natural gas output at the Independence Hub. Performance across industries varies considerably. Those with significant export orientation continue to perform well, while domestic industries continue to struggle. This picture is unlikely to change much in the second half of 2008.