Key U.S. Data Releases and Events

Producer prices are expected to jump in January due to temporary pops in food and energy prices, but core producer prices should advance a tame 0.2%. Core consumer prices will barely move the needle forward by 0.1%.

KEY U.S. DATA RELEASES THIS WEEK

Wednesday, February 17 – Housing Starts and Building Permits (Jan.)

Starts

• IHS Global Insight: 0.578 Mil.
• Consensus: 0.580 Mil.
• Last Actual: 0.557 Mil. (Dec.)

Permits

• IHS Global Insight: 0.672 Mil.
• Consensus: 0.620 Mil.
• Last Actual: 0.653 Mil. (Dec.)

What to Look For

• Starts should bounce rebound 3.8%, since the weather in January was more seasonable.
• Permits likely advanced a more moderate 3.0%.

Implications

Housing starts took a hit in December, partly because of unusually cold and wet weather, so we expect a bounce-back in January. Builders remain pessimistic, yet they are nonetheless ramping up production. Single-family permits jumped 8.3% in December, following a 4.5% November increase. Permits also posted solid increases across all four regions. How can one reconcile these numbers with the latest NAHB readings, which show builder confidence near all-time lows, and slipping in both December and January? A likely explanation is the larger builders are experiencing a pickup in demand, while the more numerous smaller builders are not. In the NAHB index, the responses of large and small builders carry the same weight. We expect this pattern to continue, and for permits to increase about 3%, to 672,000 units (annual rate).

Wednesday, February 17 – Industrial Production (Jan.)

• IHS Global Insight: 1.1%
• Consensus: 0.8%
• Last Actual: 0.6% (Dec.)

What to Look For

• Industrial production is projected to jump 1.1%, with the industrial sector firing on almost all cylinders.

Implications

Manufacturing output should show more than a 1% advance, paced by a double-digit gain in motor vehicle assemblies and a 1% increase in production workers' hours. The utility sector should manage a modest increase, as early January was bitterly cold, and abnormally so in the South, where normally low heating requirements bias the mix toward heating with electricity.

Thursday, February 18 – Producer Price Index (Jan.)

Total

• IHS Global Insight: 1.2%
• Consensus: 0.8%
• Last Actual: 0.2% (Dec.)

Core

• IHS Global Insight: 0.2%
• Consensus: 0.1%
• Last Actual: 0.0% (Dec.)

What to Look For

• Top-level prices should rise 1.2%, driven mainly by gasoline and fuel oil prices.
• Core prices expected to move up about 0.2%.

Implications

After a quiet December, the PPI is projected to have surged in January, as gasoline and fuel oil prices rose more than 10% during the month. Markedly colder weather across much of the southern United States should push fruit prices higher, pulling food prices up again. Excluding food and energy, core producer prices likely moved 0.2% higher. Weak wage and salary increases, combined with low capacity utilization rates, are keeping a lid on core finished goods prices.

Friday, February 19 – Consumer Price Index (Jan.)

Total

• IHS Global Insight: 0.4%
• Consensus: 0.3%
• Last Actual: 0.1% (Dec.)

Core

• IHS Global Insight: 0.1%
• Consensus: 0.2%
• Last Actual: 0.1% (Dec.)

What to Look For

• Top-level consumer prices likely to be up 0.4%.
• Core prices expected to rise a more subdued 0.1%.

Implications

Consumer prices should rise 0.4% in January. Higher gasoline prices pulled energy prices up, and food prices probably matched December's 0.2% increase. Excluding food and energy, core consumer prices are projected to advance 0.1%. High unemployment is keeping a lid on wage gains and consumer demand, limiting the rise of core services prices.