A preview of the US data Friday 16 February 2018; Housing starts (January) and University of Michigan Sentiment (February)
These are due at 1330 GMT (housing starts) and 1500 GMT (UofM Sentiment)
Previews ...
Housing Starts
Barclays:
- We look for housing starts to increase to 1225k, representing 2.8% growth on the month. We expect the increase to be driven primarily by a rebound in single-family starts, after this category fell a sharp 11.8 % m/m in the prior month. However, we also expect a modest increase in multi-family starts.
Capital economics:
- Housing starts had a poor end to 2017
- An 8.2% m/m drop in December means starts finished the year 6% down compared to a year ago, with the single-family sector driving the contraction
- Until the latest drop, single-family starts had been gaining momentum, with starts reaching a 10-year high in November. And homebuilders have been growing increasingly confident, with the NAHB measure recently hitting a 19-year high. That confidence reflects strong market fundamentals, with a robust labour market, and lack of existing homes for sale, supporting new home demand. We expect the NAHB index held its ground at 72 in February. The December drop in starts therefore looks like a blip on a gradual upward trend. Indeed, single family building permits increased in December for the fourth month in a row to a 10-year high.
- The drop in starts is therefore likely to have been largely reversed in January, and we are pencilling in a gain of 6% m/m to 1.27m annualised.
University Of Michigan Sentiment
Barclays:
- We expect the preliminary estimate of the University of Michigan index of consumer sentiment to edge lower to 93.0 in February (prev.: 95.7). The recent sell-off in US stock markets is likely to lead to some uncertainty about current conditions for consumers. That said, despite the moderation, the index should remain at levels consistent with healthy consumer sentiment.
Capital economics:
- Even though the stock market has dropped back in recent weeks, we expect the buoyant jobs market and recently passed tax cuts to keep consumer confidence high.
- Meanwhile, gasoline prices have continued to increase as a result of higher global crude oil prices.
- On the other hand, labour market conditions remain exceptionally strong. Jobless claims have continued to trend lower. The tax cuts passed last year will have started to show up in most workers pay in February, more than offsetting the hit to disposable incomes from higher oil prices.
- Accounting for all these factors, our model of the U. Michigan consumer confidence index suggests that it will remain at a high level in February. As a result, we are pencilling in a level of 96.0 for the headline index, little changed from its level in January, and still consistent with strong consumption growth at the beginning of 2018.
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