1. UK CBI Industrial Trends
2. Canadian Leading Indicators
3. US Existing Home Sales
UK CBI Industrial Trends (AUG) (10:00 GMT; 06:00 EST)
Consensus: n/a
Previous: -11
Outlook: The Confederation of British Industrys monthly survey of the nations manufacturers has shown great improvement over the year, but may have a difficult time making further gains in August as a strong British Pound undermines exporters competitiveness. The outlook at home is also becoming gloomier, as the World Cup-related boost in demand normalizes and unemployment, now 5.5 percent, is at multi-year highs. Albeit a rising trend, industrial production in the UK has risen only once on an annual basis since 2005. While a waning real estate market and growing unemployment should hurt the domestic outlook, the exporting gauge, which has been carrying the weight, will be put under extra pressure amid an appreciating currency.
Previous: The CBIs monthly survey, which tracks the trends of output expectations, total orders, export orders, stocks and price expectations rose one point to a negative 11 print in July. Much of the optimism for the overall read fell to the export orders component, which jumped into positive territory for the first time in a year. The employment gauge also grew from a negative 23 to negative 13. Manufacturers expressed concern over local inflation at home, though; with domestic prices, along with their expectations, falling amid optimism for export prices. On this note, business optimism fell from a negative 2 to negative 6.
Canadian Leading Indicators (JUL) (12:30 GMT; 08:30 EST)
Consensus: 0.2%
Previous: 0.2%
Outlook: Leading indicators in the worlds eighth-largest economy are expected to hold at a 0.2 percent growth pace in July, fighting off further declines from its year-high of 0.6 percent in May. Manufacturing expansion for the period may be a key contributor given the Ivey PMI for July reported at 60.1 when expected only to hit 53.0. The Sandamp;P/TSX, which tracks Canadian stocks, also rose by 1.7 percent in July, fueled by a late month run. However unemployment jumped by 0.3 percentage points from multi-year lows to 6.4 percent, pressuring consumer spending which carried much of Junes growth. While inflation in July unexpectedly rose, further declines in leading indicators will further puts the Bank of Canada in the same boat as the Fed, that is, standing pat on rate policy as growth theoretically moderates inflation.
Previous: The Canadian index of leading indicators rose in line with expectations by 0.2 percent in June, down from an upwardly revised 0.4 percent gain in May. Led by consumer spending, the gain was the smallest since March of 2005 and an indication that higher interest rates and a stronger currency are impairing economic growth. Marking the biggest contributors to the months read, the measure of furniture and appliance sales rose by 1.4 percent, the stock market component fell by 0.6 percent and the real estate component fell by 0.5 percent. Nonetheless only four of the 10 components rose in June as compared to six in May, as optimism for different areas of the economy in the months ahead drop off.
US Existing Home Sales (JUL) (14:00 GMT; 10:00 EST)
(MoM) (YoY)
Consensus: -1.2% 6.55M
Previous: -1.3% 6.62M
Outlook: Economists project that the measure of existing homes sales, conducted by the National Association of Realtors, will decline by 1.2 percent in July, to an annual 6.55 million unit pace. If these forecasts are matched, the measure will be at its lowest level in two-year as high mortgage rates further curb demand that is already feeling the pinch of a more frugal consumer. Bringing into perspective the financial burden of home ownership, the most common 30-year fixed mortgage rate topped out at 6.8 percent over the week ended July 21st, the highest its been since May of 2002. Affordability of housing is now at its lowest in twenty years, leading economists to predict the first annual decline of house prices since April of 1995. Although consumer spending continues to show strength, further declines in housing will impose a serious threat to the USs chief economic engine.
Previous: Sales of previously existing homes in the United states fell by 1.3 percent to an annual rate of 6.62 million in June, down from 6.71 million in May. The readings five-month low is primarily a product of higher borrowing costs as mortgage rates are pushed up from the rising benchmark rate. Inventories of homes that have yet to sell at the current sales pace rose to the highest since 1997. At four-year highs, mortgage rates are cooling the housing market, which until this year, has set five record years. Due its close ties to the consumer, housing has been pushing consumer confidence down as of late, as seen in the University of Michigans falling indicator.
