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Weekly Observatory

Mon, May 25 2009, 09:43 GMT
by BBVA Bancomer Team

BBVA Bancomer

Consumer Confidence (May, Tuesday 10:00 ET)

F: 41.5 C: 43.0 P: 39.2

Consumer confidence is expected to increase further for the third month in a row as people react to recent positive economic data. Nevertheless, the index’s level will still come in far below the historical average of 96.5, indicating that confidence remains weak. An increase in confidence could be a good sign for consumer spending because people will spend more as their outlook of the future improves.

Durable Goods Orders (April, Thursday 8:30 ET)

F: 1.0% C: 0.5% P: -0.8%

Durable goods orders are expected to increase in April after falling in March as improvement in the ISM manufacturing new orders index indicates that business confidence for the industry may be improving. As a result, we could see an increase in industrial production over the next few months. Nevertheless, orders are expected to remain at levels well below those of last year, but the pace of contraction is stabilizing.

Existing Home Sales (April, Wednesday 10:00 ET)

F: 4.67M C: 4.66M P: 4.57M

The housing market is expected to show more signs of stabilization as increasing affordability and the new tax credit continue to entice buyers into the market. As a result, existing home sales are expected to rise in April to 4.67M from 4.57M. However, sales will remain below last April’s levels. An increase in April’s sales could be an indication of an improvement in the residential investment component of GDP for 2Q09 compared to that of the first quarter.

Chicago Purchasing Managers’ Index (May, Friday 9:45 ET)

F: 42.0 C: 42.0 P: 40.1

As consumers and businesses alike respond to signs of stabilization in economic activity, we expect the Chicago PMI to show modest improvement in the manufacturing and services industries in the Chicago region. Nevertheless, the index is expected to remain below the benchmark of 50, which will indicate further contraction of business activity, albeit at a slower pace.

Corporate Profits (after tax) (1Q09, Friday 8:30 ET)

F: -10.7% C: n.a. P: -6.1%

Corporate profits for the first quarter are expected to decline further as businesses continue to suffer from feeble demand. The ongoing plunge in profits could bode poorly for non-residential investment as businesses limit their capital spending and put investment projects on hold. As a result, we could expect to see further drop in the non-residential investment component of GDP in 2Q09.

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Published on  Mon, May 25 2009, 09:53 GMT