US: Housing starts and Philly Fed survey in the limelight - Nomura

Research Team at Nomura, suggests that the housing starts and Philly Fed Survey will be the key economic releases in today’s session in addition to the CPI data.

Key Quotes

“Housing starts: Housing starts dropped sharply in September, declining 9.0% m-o-m to an annualized 1047k, well below expectations. Most of the weakness was concentrated in multi-family starts, which dropped 38% to an annualized 264k from 426k in the prior month. We think that the sharp drop is due to pent-up payback after strong prolonged gains in the prior months. As such, we expect multi-family starts to rebound to some degree in October. On the single family component, building permit data suggest that single-family housing starts remained steady in October. Together, we think that total housing starts rebounded strongly by 10.8% to an annualized 1160k in October.” 

“On building permits, we think that permit application reverted back to the trend after a sharp jump in September and forecast a 3.9% decline to an annualized 1182k.”

“Philly Fed Survey: The Philly Fed index edged lower to 9.7 in October from 12.8 in September. Although the headline index declined, the details of the report showed better manufacturing activity in the Philly Fed district in October. The new orders index improved almost 15 points to 16.3, and the shipments index swung back into positive territory to 15.3 from -8.8. Employment indicators were on the soft side but improved from September. The number of employees index edged upwards to -4.0 from -5.3, while the average workweek index improved to -2.2 from -11.7. We think these broad improvements imply that business conditions remained favorable in the Philly Fed region and forecast that the index was steady at 7.0 in November.”