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Weekly Observatory

Mon, Apr 20 2009, 07:47 GMT
by BBVA Bancomer Team

BBVA Bancomer

Leading Indicators (March, Monday 10:00 ET)

F: -0.3% C: -0.2% P: -0.4%

March’s leading indicators index is expected to decrease further, indicating that the economy continues to be weak. The index is expected to be pulled down by the increase in average initial jobless claims, the decrease in average weekly hours, the fall in building permits and the expected decline in durable goods orders. However, the rise in the S&P500 and the small increase in consumer confidence are expected to have a positive effect on the index.

Initial and Continuing Jobless Claims (Apr 17, Thursday 8:30 ET)

F: 623K, 6180K C: 633K, 6135K P: 610K, 6022K

Initial jobless claims are expected to remain high as mass layoffs continue. Over the past eleven weeks, initial claims have fluctuated between 610K and 674K, indicating that there has been some stabilization in layoffs, albeit at a very high number. In addition, continuing jobless claims will continue to rise as the number of unemployed increases and the limited job market causes people to spend more time out of work. The sustained high number of layoffs could continue to put downward pressure on consumption and consumer confidence.

Existing Home Sales (March, Thursday 10:00 ET)

F: 4.68M C: 4.65M P: 4.72M

After rising in February, March’s existing home sales are expected to fall slightly, however they could show some stabilization on a year-over-year basis. Favorable mortgage rates, declining home prices and the first-time buyer tax credit are expected to continue to attract people to the market. However, the market is still weak and there is excess supply as foreclosures continue, so home prices could continue to fall further.

Durable Goods Orders (March, Friday 8:30 ET)

F: -1.3% C: -1.5% P: 3.5%

New orders of durable goods are expected to fall in March after rising by 3.4% in February. The ongoing economic weakness and tight credit markets are continuing to negatively impact demand. Additionally, orders of non-defense capital goods excluding aircraft and parts have been decreasing sharply on a year-over-year basis for the past four months due to the recession at home and abroad. This component is expected to decline further until demand is renewed, which is in line with our forecast of a negative contribution of non-residential investment to GDP in 2009.

New Home Sales (March, Friday 10:00 ET)

F: 330K C: 340K P: 337K

Similar to existing home sales, new home sales are expected to show some stabilization on a year-over-year basis. This market is also benefiting from declining home prices, favorable mortgage rates and the new tax credit for first-time buyers. However, levels have been more than 35% below those of a year ago for the past twelve months and inventories remain high, so we expect the market to remain weak in the upcoming months.

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Published on  Mon, Apr 20 2009, 08:07 GMT