US data reviewed and previewed - Nomura

Analysts at Nomura offered a review of the latest US data and preview of forthcoming today.

Key Quotes:

"Review Case-Shiller home price index: The Case-Shiller 20-city home price index increased 5.67% y-o-y in April, following a 5.88% increase in March. On a m-o-m basis, the index was up 0.28%, after a 0.53% increase. Low housing inventory compared to demand has been driving steady increases in home prices. Supply of both new and existing homes has been low. In particular, inventory of new or existing homes has been hovering around a low of a four months’ supply. With mortgage rates remaining low and healthy employment and income gains, persistently high demand may continue over the medium term. Without an influx of supply above current levels, continued home price appreciation could continue in the near future. 

Conference Board’s Consumer Confidence: According to the Conference Board, consumer confidence increased in June with the headline index rising by 1.3pp to 118.9. This increase was driven by an uptick in the present situations index, increasing to 146.3 from 140.6. The expectations index ticked down by 1.7pp to 100.6, the third consecutive month of decline. Since March, the expectations index has decreased by 11.7pp. The labor index was up 3.1pp, with an increase in the number of consumers reporting jobs as plentiful and a decrease reporting jobs as hard to get. Within demographic groups, the increase in consumer confidence was driven by consumers older than 35 and those with an income between $35-125k. Today’s headline number contrasts with the June numbers from the University of Michigan (which ticked down slightly). The University of Michigan final survey results for June will be out on Friday. Today’s report from the Conference Board indicates a continuation of heightened optimism from consumers with a slight decline in future expectations. 

Preview 

Advance goods trade balance: Goods trade data were weak in April with the second consecutive decline in nominal goods exports. At the same time, nominal goods imports increased steadily, widening the trade gap to $67.1bn. Based on incoming container data at major US ports, we expect weakness in goods exports continued in May. Moreover, export prices dropped notably in May, the first time since August 2016, lowering the nominal value of goods exports. Further, goods imports may have declined after two consecutive months of increases. Altogether, we expect a goods trade deficit of $67.3bn in May, widening further from April (Consensus: deficit of $66.0bn). 

Pending home sales: Pending home sales fell for a second month in April, down 1.4% m-o-m from March. It is possible that a limited supply of homes for sale on the market dampened the number of contract signings. However, consumer fundamentals have remained supportive for housing demand. Although low inventories have contributed to rising home prices, continued income growth and a recent tick-down in mortgage rates may partially mitigate the worsening of home affordability. For May, consensus expects an increase of 1.0% m-o-m."