December industrial production warmed up, and housing starts climbed during the final month of the year as well. Both reports were very welcome signs for the weakest parts of the economy lately. The financial markets will get further updates on these two struggling sectors this week.
Some economists believe the upturn in housing starts and permit activity indicates the worst of the housing recession has passed. Those better-than-expected results are likely to be complimented by steady sales figures for both new and existing homes. Beyond the sales numbers, inventory levels are also important. The number of unsold homes must also come down further to reduce the downward pressures on home prices.
However, a caveat should accompany the latest batch of housing figures. According to the National Oceanic and Atmospheric Administration, the national average temperature was about four degrees above average. The temperatures were even further above average in the Northeast. This is where starts picked up the most in December. Through the first two weeks of January, the national average temperature is running close to five degrees above average, which could impact January numbers as well. The true state of the housing market will be hard to gauge until the spring building and buying seasons truly get underway in the second quarter.
The numbers coming from the manufacturing sector are a little mixed. Recent regional factory activity readings have ranged from mixed to downcast. However, real activity figures are generally looking better. Economists forecast another solid gain in December durable goods orders.
Where orders grow and how broad any increase is will be important. The best way to judge the latest results in one number is to look at the non-defense capital goods orders less civilian aircraft. This number strips out the volatile monthly order figures of aircraft and provides a snapshot of business investment related activity.
Here's the weekly economic calendar, from Action Economics.
|Report||Date||Time||For||Median Estimate||Last Period|
|Existing Home Sales (million, annual rate)||Thursday, January 25||10:00 a.m.||December||6.25||6.28|
|Durable Goods Orders||Friday, January 26||8:30 a.m.||December||1.2%||1.6%|
|New Home Sales (million, annual rate)||Friday, January 26||10:00 a.m.||December||1.05||1.05|
MEETING OF NOTE
Monday, Jan. 22, 3:20 p.m. EST - Federal Reserve Bank of San Francisco President Janet Yellen speaks about the economic outlook before the Rotary Clubs of Reno and the East Bay in Reno, Nev.
LEADING INDICATORS - Monday, Jan. 22, 10 a.m. EST
The Conference Board's composite index of leading economic indicators most likely grew a notch. The November index rose 0.1% for a second straight month, after a 0.4% gain in September. Compared to the same period a year ago, the index was unchanged in November, after a 0.9% gain in October.
The rise in December will be led by higher stock prices, lower weekly claims, and a slowdown in deliveries to manufacturers in the Institute for Supply Management's factory activity report. There should also be a little larger drag from interest rates, as the spread in long term and short tem interest rates widened during December. The yield on a 10-year Treasury note eased more, while the federal funds rate held at 5.25%. A decline in the University of Michigan's December index of consumer expectations will hold back any December gain.
MEETING OF NOTE
Tuesday, Jan. 23 - The Organization for Economic Cooperation and Development Chief Economist Jean-Phillipe Cotis holds a videoconference on the economic survey of the euro area in Washington, D.C.
9 p.m. EST - U.S. President George W. Bush delivers the annual State of the Union address before the U.S. Congress in Washington, D.C.
ICSC-UBS STORE SALES - Tuesday, Jan. 23, 7:45 a.m. EST
This weekly tracking of retail sales, compiled by the International Council of Shopping Centers and UBS bank, will update buying activity for the period ending Jan. 20. Weekly sales were unchanged during the week ended Jan. 13, after growing 0.7% during the week of Jan. 6. The increase from a year ago jumped to a pace of 4.9%, from 3.4% in the prior week, and 2.8% in the week ended Dec. 30. The latest results likely reflect redemptions of gift cards, which skyrocketed in popularity.
JOHNSON REDBOOK INDEX - Tuesday, Jan. 23, 8:55 a.m. EST
This weekly measure of retail activity will report on sales for the second fiscal week of the year, ended Jan. 20. During the first fiscal week, ended Jan. 13, sales were up 1.5%. Sales during the full month of December were up 1.7% compared to November.
RICHMOND FED SURVEY - Tuesday, Jan. 23, 10 a.m. EST
The Richmond Federal Reserve Bank releases its January survey of business conditions for the region. The district's manufacturers turned pessimistic about conditions in December. The manufacturing index fell to -6, from 7 in November and -2 in October. The shipments, new orders, and employment indexes turned negative as well, while the unfilled orders reading slumped further into negative territory. All in all, the results indicate a sharp slowdown in activity.
Looking ahead to the next six months, manufacturers were a little less positive. The December shipments reading slipped to 30, from 35 in both November and October. The new orders and unfilled orders indexes also cooled off a bit in December. The capital expenditures reading edged a little lower, but remained at a solid level.
MORTGAGE APPLICATIONS - Wednesday, Jan. 24, 7 a.m. EST
The Mortgage Bankers Association issues its weekly mortgage application volume data for home buying and refinancing activity during the week ending Jan. 19. Application activity picked up significantly in the latest period. The purchase index cooled some in the week ended Jan. 12, to 439.7, after jumping to 472.8 in the week ended Jan. 5. The refi index kept climbing. The index hit 2045.8 in the latest period, from 1923.8 in the week ended Jan. 5.
The four-week moving average for the purchase index edged up to 427.4, from 426.6 in the week ended Jan. 5. The four-week average for the refi index fell grew to 1803.7, from 1784.4,
The latest uptick in activity occurred even though mortgage rates headed higher. The average 30-year fixed-rate mortgage rose to 6.19%, from 6.13% in the week ended Jan. 5.
JOBLESS CLAIMS - Thursday, Jan. 25, 8:30 a.m. EST
Jobless claims fell further in the week ended Jan. 13, to 290,000. In the prior week, claims were revised down a step to 298,000, from the originally reported 299,000. The declines pulled the four-week moving average down to 308,000, from 314,500 in the week ended Jan. 6. Continuing jobless claims for the week ended Jan. 6 bounced back to 2.53 million, from 2.41 million.
EXISTING HOME SALES - Thursday, Jan. 25, 10 a.m. EST
Existing homes probably edged lower in December. Sales rose to an annual pace of 6.28 million in November, from 6.24 million in October, and 6.21 million in September. Sales were down 10.7% from a year ago in November.
Sales of condominiums continue to tumble faster than single-family homes. In November, condominium sales were down 13.6% from a year ago, while single family sales were down 10.2%.
The monthly level of unsold existing homes eased to 7.3 months, from 7.4 months in October. The nominal level of unsold homes also fell to 3.82 million in November, from 3.86 million in October. Weaker sales and high inventory levels are putting downward pressure on prices. Compared to a year ago, the median price of existing homes was off 3.1% in November, after dropping 4.4% in October.
HELP-WANTED INDEX - Thursday, Jan. 25, 10 a.m. EST
The Conference Board releases its December index of help-wanted ads, based on ads gathered from major newspapers across the nation. The November index held at 30 for a second straight month, from 29 in September. The percentage of markets with a rising want-ad volume tumbled to 37%, after rising to 59% in October, from 33% in the prior period. Help-wanted ads fell during the three-month period through September in five of the nine U.S. regions.
The Conference Board's tracking of online job ads slipped a little more in December as well. Total monthly online job ads fell by 366,700 in December. That resulted in 2.2 advertised vacancies for every 100 persons in the labor force, down from 2.4 in November, and 2.5 October. But the level was still up from the year-ago result of 1.9 vacancies per 100 persons.
DURABLE GOODS ORDERS - Friday, Jan. 26, 8:30 a.m. EST
New orders for durable goods kept rising in December, according to economists queried by Action Economics. In November, orders grew 1.6%, after a big 8.1% collapse in October. The November rally was largely driven by a 53.4% rebound in orders for computers, after a 34.2% fall in October. Outside of computers, machinery and electrical equipment orders were down in November, after some solid gains in the preceding months. The big October plunge was also caused by a sharp decline in orders for civilian aircraft.
Based on the December industrial production report, manufacturing activity appears to be rebounding. After weak results in the prior three months, factory output grew 0.7% in December. Increased output and growing levels of new orders provide some evidence that manufacturers are climbing out of their late 2006 funk.
NEW RESIDENTIAL SALES - Friday, Jan. 26, 10 a.m. EST
New single-family homes sales probably steady in December. Purchases grew in November, to an annual rate of 1.05 million, from 1.01 million in October. In November, sales rose sharply in the Northeast, West, and Midwest, and declined in the South. Above average temperatures may have helped sales in the Northeast.
The increase in sales pulled down the months supply of homes for sale, to 6.3 months, from 6.7 months in October. The total number of homes available for sale declined for a fourth straight month, to 545,000. The number of completed homes that are yet to be sold still grew. The November level was 169,000, up more than 50% from a year ago.
|Monday||Compass Bancshares, Eaton, Texas Instruments|
|Tuesday||Advanced Micro Devices, Avaya, Avery Dennison Corp., Bank of America, Burlington Northern Santa Fe, Citrix Systems, CSX, D.R. Horton, DuPont, EMC, Johnson & Johnson, Pactiv, PNC Financial Services Group, QLogic, Sun Microsystems, Tellabs, United Technologies, Wachovia, Xerox, Yahoo, Zions Bancorp|
|Wednesday||Abbott Laboratories, Air Products and Chemicals, Allegheny Technologies, AmeriSourceBergen, Ashland, ConocoPhillips, Convergys, Exelon, First Data, General Dynamics, LSI Logic, McCormick & Company, Norfolk Southern, Novellus Systems, Praxair, Teradyne, Hershey Company, Unisys, Waters, WellPoint|
|Thursday||Amgen, AT&T, Ball, Baxter International, Becton, Dickinson and Company, Bemis Company, BJ Services, Bristol-Myers Squibb, Brunswick, Cardinal Health, Compuware, Consolidated Edison, Danaher, Dow Chemical, Dow Jones & Company, Eastman Chemical, Federated Investors, Harman International, Hartford Financial Services, Janus Capital Group, Kimberly Clark, Leggett & Platt, Lockheed Martin, MBIA, McGraw-Hill, McKesson, Microsoft, NCR, Northrop Grumman, Nucor, Occidental Petroleum, Peabody Energy, PMC-Sierra, Quest Diagnostics, Rockwell Collins, Rohm and Haas, Southern Company, St. Jude Medical, Stanley Works, Stryker, Textron, Union Pacific, UST, W.W. Grainger|
|Friday||Caterpillar, Halliburton, Honeywell, Manor Care|