February 14, 2012 / 8:20 PM / 6 years ago

IFR-Preview-Major US economic data for Feb. 15

WHAT: Federal Reserve Bank of New York Empire State
Manufacturing Survey Index, February
WHEN: Wednesday, 0830 EST (1330 GMT)
 FORECASTS         Reuters    IFR     Previous
 ESMS index        15.00      16.00   13.48
IFR COMMENTARY: "The Empire State Manufacturing Survey will
likely see just a bit of improvement in its February reading,
rising from +13.48 to about +16.00. Forward-looking indicators
in the January report looked fairly nice, with the new orders
index rising from +5.99 to +13.70, while the future activity
index rose from +45.61 to a very healthy +54.87.	
    "The New York Fed's reading has only relatively recently
emerged from five months (June to October) of indicating
contraction, and still hasn't recovered to the growth levels it
indicated early last year. But growth in the manufacturing
sector as a whole appears to be slowly gathering strength, with
January seeing the sector add an outsized 50k to payrolls, and
that should be reflected in most if not all the regional Fed
    "The New York reading might not accelerate as quickly as
some of the others, however, given that sentiment as per the
Empire State Survey already appeared to be higher than that
recorded by most other surveys."
WHAT: Federal Reserve Industrial Production, January 	
WHEN: Wednesday, 0915 EST (1415 GMT)  	
 FORECASTS (pct)           Reuters    IFR     Previous 
 Industrial production     +0.7       +0.8    +0.4
 Capacity use rate         78.6       78.6    78.1
IFR COMMENTARY: "Industrial production looks set to have its
best reading in six months, with manufacturing output driving
the headline index up 0.8%. If accurate, that would send
capacity utilization up from 78.1% to about 78.6%, which would
be the highest since July 2008. Though that would not yet be
back to the long-run average of roughly 81%, it would be
creeping closer to the point at which factories would have to
begin investing more heavily in capacity in order to increase
    "According to data from the employment report, the sector's
aggregate hours worked by all workers rose 1.2% in January, the
most in data going back through 2006. Nonsupervisory employee
hours were up 1.3%, the highest since March 2010.
Correspondingly, we look for factory output to be up 1.1%, which
would be the biggest jump since May 2010. Coming on the heels of
December's 0.9% rise, it appears as though growth may be
returning to early-recovery rates. 	
    "A fourth consecutive month of particularly mild weather (by
some measures, the mildest yet) will likely see utility output
shrink for a sixth month in a row. That will likely be partially
offset by a modest increase in mining production."
WHAT: National Association of Home Builders Housing Market
Index, February
WHEN: Wednesday, 1000 EST (1500 GMT)	
 FORECASTS       Reuters     IFR     Previous
 HMI             26          25      25
IFR COMMENTARY: "We look for the NAHB Housing Market Index to
hold at 25 in February, with availability of credit remaining a
serious constraint on new home sales, largely frustrating what
appears to be a recent surge in demand. Still, a pause at 25 or
very close to it would mark a consolidation of impressive gains:
The NAHB series has moved up 11 points over the last four
months, bringing it to its highest reading since June 2007 --
even beating out months in 2009 and 2010 when sales spiked due
to homebuyer tax credits.	
    "And yet, the new home sales series has remained
surprisingly moribund. A clue may come from the NAR's existing
home sales data, which notes that a third of signed contracts
for existing homes in recent months have failed to close, likely
due to failures to obtain mortgages or low appraisals. Indeed,
mortgage purchase applications have been holding at extremely
low levels over the last year and a half, with little sign that
lenders have eased standards. 	
    "We expect that the reality of continued low sales will
temper growth in the HMI. Still, homebuilders do appear to be
seeing more traffic, and undoubtedly are savoring the sight of
falling existing home inventories, which in December fell to the
lowest level since March 2005. Thus their expectations for the
future will likely remain optimistic relative to the last few
WHAT: Federal Open Market Committee minutes from Jan. 24-25
WHEN: Wednesday, 1400 EST (1900 GMT)
IFR COMMENTARY: "The minutes from the January 24-25 FOMC meeting
could contain some interesting insights as to whether the FOMC
expects to implement QE3 at some point in 2012. Given the tone
of the January 25 statement, projecting an exceptionally low fed
funds rate through late 2014, a dovish tone to the minutes looks
guaranteed. While the Fed has revealed more on the outlook than
ever before by publishing for the first time its projections on
the fed funds rate, the January 25 statement contained no
projections on the size of the balance sheet. Bernanke in his
post-meeting press conference stated that the minutes would
provide additional qualitative information about participants'
views of the balance sheet going forward. The minutes are likely
to show several expecting a need for QE3 under the FOMC's
subdued growth and inflation projections, though the views of
the hawks, and not just of Lacker, the only hawk with a vote
this year, will also be detailed. Talk over QE3 could be the
highlight of the minutes, though dovish sentiment should also be
conveyed from participants noting a slowing in many indicators
in late 2011, notably consumer spending and business investment,
and risks for 2012 from Europe and fiscal tightening. Some may
feel that dovish sentiment conveyed in the minutes may already
be dated given improved data released since the meeting, and it
certainly is true that any case for QE3 has become harder to
make. However, the majority at the Fed are unlikely to change
their tone quickly, and should the data start to falter,QE3
could be back on the table."

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