Article / 16 January 2013 at 6:35 GMT

3 numbers to watch: EU HCPI, US Ind. Pro., US Housing Mkt Index

editor/analyst /
United States

Eurozone inflation, US industrial production and the US NAHB Housing Market Index will drive the Wednesday's economic news.

EU Harmonized Consumer Price Index (10:00 GMT) Eurozone inflation is expected to rebound in December after a 0.2 percent decline in November. That's a relatively cheery outlook because it suggests that deflation is only a sporadic monthly pest rather than a chronic affliction. For a continent that's still suffering from a range of macro challenges, including a recession, inflation that's above zero is a good thing at this stage, even if the region's central bankers aren't always quick to agree.

Earlier this month, Eurostat published its preliminary estimate of the annual pace of inflation through December, advising that it is expected to remain unchanged from its November year-on-year pace of 2.2 percent. This is par for the course with so much sluggish macro behavior around. But while a downside surprise is unlikely, an unexpected dip in December inflation of any magnitude in the final estimate would surely alarm investors given the slack demand all around.


US Industrial Production (14:15 GMT) November's strong rise in industrial output was partly due to payback from reduced activity in October due to Hurricane Sandy, but there's no white knight waiting in the wings for December. Analysts are expecting a greatly diminished growth rate for last month: +0.2 percent vs +1.1 percent in November, although my econometric modeling suggests that we may see something closer to a flat performance. In any case, there's wide agreement that today's update looks set to bring news of a substantial downshift in industrial activity.

The crowd may be in a forgiving mood for US data, however, given yesterday's upbeat report on retail sales for December, which followed a decent if unspectacular gain for last month's payrolls. Nonetheless, if the average of my econometric forecasts holds - a gain of just 0.1 percent - that equates with industrial production's annual growth rate falling to 1.7 percent in 2012, or just above the slowest year-on-year pace in three years.

An upside surprise would come in handy right about here. Unfortunately, the odds look a bit thin, and so today's report could be a bit tricky for deciding what comes next.


US NAHB Housing Market Index (15:00 GMT) Industrial production may falter in December, but the outlook for housing via this benchmark is expected to remain firm. The consensus forecast sees another slight gain for this measure of sentiment among home builders: 48 for January, up a bit from last month's 47.

HMI is a diffusion index and so 50 is the midpoint level, an indication that half of the survey respondents consider housing market conditions to be favorable. As we approach this mark, it is clear that the tide is turning for thinking positively within the industry. “Builders across the country are reporting some of the best sales conditions they’ve seen in more than five years, with more serious buyers coming forward and a shrinking number of vacant and foreclosed properties on the market,” NAHB's chairman said with last month's release. More of the same is on tap for today's update.

In fact, a wide spectrum of housing market data has been sending bullish signals for much of the past year and there's no obvious reason for thinking that the trend is about to evaporate. The main exception, of course, is the potential for trouble if Congress doesn't raise the debt ceiling, which would trigger a technical default for the US government and wreak havoc in the credit markets. But the associated crunch time arrives next month, and there's a decent chance that the fiscal crisis will be averted... probably at the last moment. This is no way to run a railroad (or the planet's leading economy), but it's not yet clear that the new round of Beltway nonsense is infecting the housing market's revival. Next month, of course, may be another story.



The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Show latest activity
Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail