- Leading indicators (Mar): another decline
- Existing and new home sales (Mar): falling despite boost from foreclosures
- Durable goods orders (Mar): setback after defense-related surge
Leading indicators are likely to have fallen again in March, but the rate of decline will probably have moderated slightly to -0.2% or -0.3% mom: building permits and the stock market will have had the biggest negative impact, followed by faster deliveries, the decrease in manufacturing working hours and the rise in jobless claims. Orders will have also fallen again. But positive contributions from the yield curve, real M2 and consumer expectations will have compensated for that to some extent. The annualised 6-month rate could deteriorate from -4.1% to -4.5%, thus not yet showing any indication of a recovery in the second half of the year.
Driven by foreclosures, existing home sales increased unexpectedly by 5.1% mom in February. However, after this surge, we expect them to have dropped to 4.65m in March.
New home sales also rose significantly by 4.7% mom in February, as the downward trend in median prices has made purchasing a house more affordable. However, sales were still down 41% from a year ago. We forecast that new home sales will have stabilised around their current level of 337k in March.
Initial jobless claims went down sharply by 53k to 610k in the week ending 11 April, but we expect them to have bounced back to about 640k in the week ending 18 April, closer to their 4-week moving average.
Durable goods orders rose by 3.4% mom in February, but they had fallen by 27% from August 2008 to January 2009. As the graph shows, the ISM new orders component improved significantly in March, but still indicated falling orders. We estimate that durable goods orders will have declined by about 2.5% mom (ex transportation: -3.0% mom) in March, especially since half of the February improvement was a result of higher defense orders, which are particularly volatile. If non-defense capital goods orders ex aircraft, which had picked up somewhat in February, remained flat in March, they will have fallen by 36% in the first quarter. This indicates that business investment will continue to decline sharply in the near future.
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