3 Numbers: Upbeat UK CBI Trend, U.S. Home Sales, EU Consumer Mood
James Picerno | Mar 23, 2015 03:19AM ET
An early clue of Britain’s economic trend for March is on deck today with the monthly update of the CBI Industrial Trends Survey. Later, the the monthly release of US existing home sales will focus attention on the weak housing market. In addition, the European Commission publishes its initial estimate for this month's Eurozone consumer sentiment data.
said last month. If today’s update for March delivers similarly encouraging results, the case will strengthen for expecting that the UK’s first-quarter economic profile will remain on track for continued improvement.
current forecast. “Home sales are much less sensitive to interest rates than mortgage refinances, but rising rates will modestly increase the costs associated with buying a home,” Zillow advised. “It is widely expected that the boost to home sales from improving job markets will outweigh any headwinds from rising mortgage interest rates.”
By that standard, today’s update on sales for February should benefit from the ongoing strength in the labour market. Nonfarm payrolls increased 295,000 last month, a solid improvement over January’s rise of 239,000. That alone doesn’t insure an increase in home sales, but it certainly provides a tailwind. Maybe that's why economists generally are expecting a modest rise in today's data. MarketWatch.com's consensus forecast sees existing sales rising 2.5% in February to 4.94 million units in annual terms. If the prediction holds, it will mark the strongest monthly increase in percentage terms in nine months.
update of Now-casting.com’s GDP data. First-quarter output is expected to rise 0.4% over the previous quarter, the consultancy advised. If the estimate holds, the expansion in the first three months of this year will deliver the strongest gain since 2011.
There’s still a long way to go for estimating Q1 data. A full profile based on all the data won’t be available for months, and so it’s reasonable to assume that the real-time data will evolve for some time. But for the moment, cautious optimism prevails, albeit subject to revision. Today’s clue is the initial estimate of the European Commission’s measure of consumer confidence for March.
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Recent history suggests that this measure of the mood will hold on to its recent gains if not inch higher. The stakes are moderately high for this release given that sentiment has been rebounding for the last three releases. A setback of any magnitude would cast a dark shadow over the prospects for ongoing improvement in the Eurozone's macro trend.
One reason for caution: the soft data in business sentiment, based on the EC’s Business Climate Indicator, which has been flat to slightly lower lately. That’s in contrast with the upbeat numbers in the consumer sector. Is the divergence a sign that the nascent recovery is vulnerable? Yes, but the business sector’s outlook will probably improve if the rebound in consumer sentiment endures. All the more reason to study today’s flash data for March for a hint of how the March trend is shaping up.
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