RTTNews - The US economy has been passing through a turbulent period hoping against hope that the worst in the economy is over. Mixed economic data released during the past week clouded hopes of recovery in the world's largest economy, increasing the uncertainty. Trade deficit for March widened as exports declined more than the imports. After showing increases in the first two months of the year, retail sales declined in April for the second successive month. However, the rate of decline was less than in March. Business inventories declined for the second month in March. Producer prices rose more than expected during April and the weekly continuing claims rose to a record high of 6.560 million. However, the consumer price index for April came in unchanged after registering a marginal 0.3% rise during March.
Despite the mixed economic data, the general perception about the US economy is one of hope and the outright pessimism that caught the people during the past year has definitely paved way for optimism. The economic data slated for release during the upcoming week, though light, is expected to revive recovery hopes and confirm the view that the worst for the economy is over.
Traders have very little by way of economic news to digest in the unfolding week following a week, where a flurry of reports was released. The Commerce Department's housing starts report for April, the National Association of Homebuilders' housing market index for May and the minutes of the April FOMC meeting are likely to be in the spotlight during the week.
Traders may also pay attention to the results of the Philadelphia Fed's manufacturing survey for May and the Conference Board's leading indicators for April. Apart from these, some degree of importance may also be attached to the Fed speeches scheduled for the week and the regularly scheduled jobless claims and oil inventory reports.
Housing starts may see a rebound in April, although economists are still not certain that the trough has been reached. According to Wachovia Securities, housing starts may hover around the half-million mark till the first half of the year before beginning to slowly climb in the second half of the year.
Positive stock market performance, yield spread and initial claims are likely to have a positive impact on the Conference Board's leading indicators. However, money supply, index of supplier deliveries and non-defense capital goods orders are likely to act as drags.
The National Association of Homebuilders' is scheduled to release the results of their survey on homebuilders' confidence at 1 PM ET on Monday.
In March, the housing market index rose 5 points to 14. The March reading was the highest since October. All three sub-indexes improved, with the indexes for present conditions, future sales outlook and prospective buyers traffic rising in the month. Builder confidence has apparently benefited from record low mortgage rates and the advent of the spring season.
A report on housing starts, which refer to the number of privately-owned new homes on which construction has been started over some period, and building permits, which is the number of permits issued for new housing units each month, is slated to be released at 8:30 AM ET on Tuesday. Economists estimate housing starts of 527,000 for April.
Housing starts fell over 10% month-over-month in March to 510,000, with the bulk of the decline concentrated in multi-family starts following a very strong performance in February. February starts were revised down to 572,000 from the 583,000 reported initially. Building permits declined 9% to a record low, as both single-family and multi-family permits declined in the month.
Minneapolis Federal Reserve Bank President Gary Stern is due to speak to the Willmar Lakes Area Chamber of Commerce in Willmar, Minnesota at 1:15 PM ET.
The Federal Reserve is scheduled to release the minutes of its April 29th meeting at 2 PM ET.
At its April meeting, the Fed maintained its key fed funds target rate unchanged at a range of 0%-0.25%. The FOMC noted that the economy continued to contract, with the pace of contraction slowing somewhat. Despite the stabilization in consumer spending, the committee noted that spending continued to be constrained by job losses, lower housing wealth and tight credit.
Overall, the central bank is of the view that economic activity is likely to remain weak for a time. That said, the committee expects sustained economic growth will resume gradually due to policy actions, fiscal and monetary stimulus and market forces. Additionally, the fed suggested that inflation may remain below rates that are consistent with economic growth and price stability.
Philadelphia Federal Reserve Bank President Charles Plosser is scheduled to speak to the New York Money Marketeers at 7PM ET both on Wednesday and Thursday.
The Energy Information Administration is due to release its weekly oil inventory report for the week ended May 15th at 10:30 AM ET on the same day.
Crude oil stockpiles declined by 4.7 million barrels in the week ended May 8th to 370.6 million barrels. Notwithstanding the decline, crude oil inventories were above the average range for this time of the year.
Distillate inventories increased by 1 million barrels and remained above the upper boundary of the average range, while gasoline inventories declined by 4.1 million barrels and have fallen to the middle of the average range. Refinery capacity utilization averaged 83.8% over the four weeks ended May 8th compared to 83% last week.
The Labor Department report on the number of individuals claiming unemployment benefits during the week ended May 16th is scheduled to be released at 8:30 AM ET on Thursday.
Initial claims for unemployment benefits rose to 637,000 for the week ended May 9th, up 32,000 from the previous week's revised figure of 605,000. Economists expected claims to increase to 610,000 from the originally reported figure of 601,000 for the previous week.
The 4-week moving average for initial claims, a statistic that flattens out week-to-week fluctuations, increased 6,000 to a level of 630,500. The number of people receiving ongoing unemployment help, a statistic known as continuing claims, increased 202,000 to a level of 6.56 million in the week ended May 2nd.
The results of the Philadelphia Federal Reserve's manufacturing survey are due out at 10 AM ET on the same day. Economists expect the diffusion index of current activity to show a reading of -18 for May.
A slowdown in the contraction of manufacturing activity in April was confirmed by the Philadelphia Fed's manufacturing survey. The manufacturing index of the survey rose 10.6 points to -24.4 in April. While the new orders index jumped 16 points to -24.3, the index of backlog of orders rose to its highest level since September 2008. Notwithstanding a 15-point increase in the employment index, it remained in negative territory at -40.2. The prices paid and the prices received indexes drifted down to record low levels. The 6-month outlook index rose sharply to 36.2 in April from 14.5 in March.
The Conference Board is scheduled to release a report on the U.S. leading index for April at 10 AM ET on the same day. The consensus estimate calls for a 0.6% increase in the leading indicators index for the month.
In March, the leading indicators index fell 0.3% month-over-month following a 0.2% monthly drop in February. The largest negative contributors were building permits, stock prices and the index of supplier deliveries. On the other hand, real money supply and yield spread had a positive impact on the headline index.
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