Key U.S. data on the cards: Housing starts and Fed Beige Book – Nomura

Analysts at Nomura offered a preview of key U.S. data on rhe cards.

Key Quotes:

"Housing starts: Housing starts slowed in August, declining 5.8% to an annualized 1142k. But the slowdown was in part due to major weather events in the South (e.g., flooding in Louisiana in mid-August and Hurricane Hermine in late August). In fact, housing starts dropped by 14.7% m-o-m in the South while all other regions posted gains. In September, weather conditions were more favorable for construction activity, and the index of aggregate hours worked in the construction sector increased by 1.1% m-o-m. Permits for new housing construction remained steady over the summer. We expect housing starts to have rebounded in September and forecast 2.9% growth to an annualized 1175k (Consensus: 1175k, +2.9% m-o-m). On building permits, we forecast a 2.6% increase to an annualized 1182k (Consensus: 1165k, +1.1% m-o-m). Homebuilder sentiment jumped in September, and expectations are high for demand for new homes to strengthen. This should spur better construction activity. 

Fed Beige Book: We expect the Fed Beige Book prepared for the 1-2 November FOMC meeting to show that the economy grew steadily since the last update in September. Incoming data for September suggest that economic activity expanded at a quicker pace after a broad-based slowdown in August. In the previous Beige Book, some business contacts indicated that real estate sales and construction activity had softened “due in part to economic uncertainty surrounding the November election.” We will see if this concern has reached other sectors of the economy. We will also look for additional color on the amount of slack in the labor market, which is a key issue being discussed by FOMC participants. Last, we will keep an eye out for any commentary that may alter the Fed’s outlook on economic growth and inflation."

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