Data may point to warmth
April housing, inflation, Fed reports could show recovery
This week’s economic news could shed light on whether balmier April temperatures warmed a winter-ravaged economy as the government releases a batch of data on the slowly recovering housing market and inflation.
Today, the National Association of Homebuilders puts out its closely watched index of home
builder sentiment. It rebounded in April and the strong gains in residential construction payrolls reported last week will likely keep the measure at a solid 56 after it dipped to an eight-month low of 52 in March, said Nomura Chief Economist Lewis Alexander.
Housing starts are one of the most important engines of economic growth, with construction of each single-family home adding an average 3.5 new jobs a year. After falling to a 13-month low in February, starts bounced back by a modest 2% in March, well below economists’ estimates. Tuesday’s report on April starts should be improved, with economists surveyed by Bloomberg expecting 1.02 million at a seasonally adjusted annual rate, up 10%. Still, Alexander said he expects only a gradual recovery in housing construction. On Wednesday, the Federal
Reserve releases the minutes of its April 29 meeting. Economists will be scouring the account for clues to when the Fed is likely to raise its benchmark interest rate for the first time since 2006. In its post-meeting state-
ment, the central bank downgraded its economic outlook and said inflation remains below its annual 2% target, but at least partly blamed “transitory” effects from low energy and import prices. Economists said a June hike is highly unlikely, but the minutes could signal whether Fed officials are targeting September, as many analysts expect, or an even later date.
Existing home sales emerged from their winter slumber in March, jumping 6.1% to an annual rate of 5.19 million. Economists expect a more modest 0.6% gain to 5.22 million in April when the National Association of Realtors releases its monthly report Thursday. UBS sees an encouraging sign in strong mortgage applications. But Alexander cited the lack of a more vigorous rebound in first- time homebuyers.
A glimmer of stronger inflation would give the Fed more confidence to start raising rates. A Labor Department report on
consumer prices Friday is expected to show annual inflation remained in negative territory but ticked up slightly excluding volatile food and energy costs.