Saxo Bank | Feb 26, 2013 04:09AM ET
The CBI Distributive Trades Survey for Britain provides some clues on consumer spending in February, and two housing updates for the US — Case-Shiller Home Price Index and new home sales data — bring fresh guidance on the crucial issue of market demand for real estate.
UK CBI Distributive Trades Survey (11:00 GMT) Retail sales in Britain began this year on a weak note, falling a larger-than-expected 0.6 percent in January. Will February data bring some relief? Yes, according to the consultancy IHS, which expects to see "some improvement" in today's distributive trades survey for February from the Confederation of British Industry. The outlook for higher spending for this month reflects "consumers making up for some of the sales that were lost to January’s snow," IHS reasons.
The stakes are certainly high. Fears that Britain is slipping into a new recession are not easily dismissed after reading the January retail sales report. The CBI survey is considered a leading indicator of the hard data on consumer spending, which follows several weeks later after this report. For additional context, keep an eye on any headlines tied to today's scheduled speech in Tokyo by Bank of England chief Mervyn King (scheduled for 06:00 GMT). The market will undoubtedly read today's CBI report in the context of any macro commentary from King, who is set to talk some five hours before the survey is released.
My models also anticipate a rise, but I'm not all that confident that we'll see much more than a marginal increase. That said, it would take an usually big downside surprise to convince the crowd that the progress of last year has run its course. That is unlikely, even if today's number is a bit wobbly. Indeed, the pace of construction for new one-family homes last month rose to a four-year high - a strong sign that demand remains healthy, which will probably be reflected in today's sales report.
“We ended 2012 on a solid note and we do have some momentum heading into this year,” says Gus Faucher, a senior economist at PNC Financial Services. “The fact that single-family starts are up is very encouraging. It is more important to the economy in terms of employment and growth.”
The pressing question, of course, is whether the Washington will unleash a new wave of austerity on the macro landscape, which could derail the otherwise encouraging trend for housing. Then again, today's new home sales data is a month old, which is to say that the current troubles brewing in Washington aren't likely to infect the number du jour. Next month and beyond, of course, are wide open for debate.
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