Week ahead: inflation, housing, industrial sector data
The big day for economy-watchers this week will be Tuesday, when a slew of data is to be released that should give new insights into inflation, housing and the industrial sector.
Usually, economists are rooting for low inflation numbers. But recently deflation, or falling prices, has emerged as a risk. Against that backdrop, higher inflation is actually welcome -- and that is what the July producer price index is expected to show.
Forecasters expect wholesale prices rose 0.2 percent for the month and by a similar amount when volatile food and energy prices are excluded. That follows a 0.5 percent drop in the index in June.
Housing activity, meanwhile, might be starting to edge up after a dramatic falloff in the aftermath of the end of a tax credit for home buyers in the spring. Forecasters project housing starts to have risen 2 percent in July, after a 5 percent drop in June.
Housing permits, a more forward-looking indicator of the residential sector, are expected to have edged down, however, by 1.2 percent.
The manufacturing sector has been one of the bright spots in the economic story lately, both adding jobs and continuing at a steady pace of growth. That pattern is expected to have continued in July; analysts expect industrial production to have risen 0.5 percent, an improvement from a 0.1 percent rise in June.
Even if that projection proves accurate, it might not be as sunny a result as it looks at first; utilities have had to increase their output in order to keep air conditioners humming during a hotter-than-usual July on the East Coast, boosting overall industrial production. So for a read on the underlying health of the nation's factories, look below the headline number to the breakout of manufacturing output. There have been signs that the manufacturing recovery, although still underway, is slowing as the impact of inventory rebuilding fades.
Data on new jobless claims can be highly volatile from week to week, so one must be careful not to read too much into them. That said, last week's report of 484,000 people filing new claims for jobless benefits was a doozy, a real dose of bad news about the labor market. Watch this week's number for evidence of whether that was an aberration, or a signal that the labor market is in even worse trouble than anyone knew.
August 16, 2010; 6:44 AM ET
Categories: *Economic agenda
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