3 Numbers To Watch: German ZEW, US Industrial Production And NAHB

The market receives fresh data today on the mood in the institutional investment community in Germany. Later, two US reports will attract close attention: industrial production and sentiment in the home building industry via the NAHB Housing Market Index. In addition, keep an eye on today’s inflation updates for the Eurozone, the US, and the UK. The latter may draw a larger crowd than usual as today's CPI report for Britain is the first for Mark Carney as the Bank of England's governor and analysts think that UK inflation will rise to three percent for the first time in more than a year.

Germany ZEW Indicator of Economic Sentiment (09:00 GMT): In last week’s update of leading indicators for July, the OECD offered some relatively upbeat news for Germany and the Eurozone. The forward-looking benchmark “points to growth returning to trend” for Germany and the OECD’s leading index for Europe overall “continues to indicate a gain in growth momentum.” Todays’ release of ZEW data will reveal if the OECD’s optimism is having any positive impact on sentiment in the financial community.

The trend in recent months for this widely followed survey of German institutional investors and analysts has been more or less flat. The sluggish behavior of late is particularly noticeable for the measure that tracks expectations. Although the numbers still suggest that Germany’s economy will improve in this year’s second half, the current data set suggests that progress will be slow. “Almost half of the survey respondents expect no significant economic impulses in the next six months," noted the Centre for European Economic Research (ZEW) in Mannheim in its June report. The OECD numbers hint at something a bit better. Today’s release will tell us if the institutional community agrees.

3 Numbers To Watch: German ZEW, US industrial production and NAHB James Picerno , editor/analyst, CapitalSpectator.com Filed in 3 Numbers to Watch United States, 2 hours ago Recommend


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The market receives fresh data today on the mood in the institutional investment community in Germany. Later, two US reports will attract close attention: industrial production and sentiment in the home building industry via the NAHB Housing Market Index. In addition, keep an eye on today’s inflation updates for the Eurozone, the US, and the UK. The latter may draw a larger crowd than usual as today's CPI report for Britain is the first for Mark Carney as the Bank of England's governor and analysts think that UK inflation will rise to three percent for the first time in more than a year.
Germany ZEW Indicator of Economic Sentiment (09:00 GMT): In last week’s update of leading indicators for July, the OECD offered some relatively upbeat news for Germany and the Eurozone. The forward-looking benchmark “points to growth returning to trend” for Germany and the OECD’s leading index for Europe overall “continues to indicate a gain in growth momentum.” Todays’ release of ZEW data will reveal if the OECD’s optimism is having any positive impact on sentiment in the financial community.
The trend in recent months for this widely followed survey of German institutional investors and analysts has been more or less flat. The sluggish behavior of late is particularly noticeable for the measure that tracks expectations. Although the numbers still suggest that Germany’s economy will improve in this year’s second half, the current data set suggests that progress will be slow. “Almost half of the survey respondents expect no significant economic impulses in the next six months," noted the Centre for European Economic Research (ZEW) in Mannheim in its June report. The OECD numbers hint at something a bit better. Today’s release will tell us if the institutional community agrees.

US Industrial Production (13:15 GMT): Industrial activity has been weak lately, which is a worrisome sign if it continues. But today’s report is expected to bring somewhat better news. The consensus forecast sees a 0.2 percent increase in industrial output for June, which matches the average projection of my econometric modeling. That’s a relatively sluggish gain, but it compares favorably with the previous two months.

Industrial production’s lazy run of late would be troubling if it reflected the trend across the macro spectrum. But US data has been encouraging. Yesterday’s retail spending news for June, for instance, showed that consumption grew 0.4 percent. More impressively, the year-over-year gain for retail sales through last month touched the highest rate in more than a year. Meanwhile, yesterday’s New York Fed Index report for July suggests that manufacturing may be headed for stronger growth in the months ahead. In that case, industrial production’s pace of growth should quicken, if only moderately, in this year’s second half. To keep the optimism running, however, we’ll need to see today’s industrial production number meet or exceed expectations.

US NAHB Housing Market Index (14:00): The housing market has been enjoying a nice recovery recently, but the recent rise in mortgage rates has some analysts fearing the worst. The national rate on a conventional 30-year mortgage rose to nearly 4.5 percent in late June, up more than 100 basis points in less than two months. But with interest rates pulling back a bit over the last week, it’s tempting to think that the worst has passed, at least for now. Nonetheless, today’s update will be closely watched for any signs of damage in home builder confidence, which is considered a leading index for the housing sector generally.

In the previous release, NAHB’s index jumped to a seven-year high. “This is the first time the HMI has been above 50 since April 2006, and surpassing this important benchmark reflects the fact that builders are seeing better market conditions as demand for new homes increases,” NAHB’s chairman said in a press release last month. But mortgage rates are also higher a month later, and so it’ll be interesting to see if builders’ optimism is able to hold up. The consensus forecast thinks that's likely: today’s NAHB number is expected to remain unchanged at 52.

If economists are correct, we'll have another number for thinking positively for the second half of 2013. Even so, all bets are off if interest rates keep rising. For the moment, the waters are calm on this front. The benchmark 10-year Treasury yield remains under its recent high of around 2.70 percent.