After an overflow of data Friday, there is a breather coming in the May 18 week, but that doesn’t mean there won’t be anything for markets and analysts to focus on.
Housing data takes up much of the schedule, starting with the National Association of Home Builders’ Housing Market Index for May on Monday. Last month, the index plunged to 30 in April from 72 in March, hitting the lowest point in almost eight years on declines in both the current conditions and outlook readings.
That suggests a further pullback in the official April home building data released on Tuesday after declines in both building permits and housing starts in March. The Mortgage Bankers Association’s weekly data pointed to gains in new mortgage application activity in April and May after an initial plunge in late-March, indicated that new home building could pick up in the coming months.
On the sales side, data on April existing home sales will be released on Thursday following an 8.5% plunge in March. A surge in refinancing applications earlier in the crisis, since reduced somewhat, suggest that many current homeowners intend to ride out the crisis in their current homes before considering an upgrade to a new home. The resulting lack of existing homes for sale will keep prices elevated.
On Wednesday morning, the BEA will release its first quarter advance services revenue report. The services sector was the hardest-hit by the COVID-19 related shutdowns, a fact reflected in a 10.2% decline in services consumption in the advance GDP estimate. Wednesday’s release will include more updated figures that will shape the revised GDP release due on May 28.
Minutes of the April 28-29 FOMC meeting will be published on Wednesday afternoon. The meeting statement and following press conference reiterated what was said in speeches in previous and subsequent weeks — that the Fed stands ready to support the economy during and after the crisis.
Fed Chair Powell’s comments this past Wednesday were seen by markets as extremely bearish, so analysts will look at the minutes to see if the meeting conversation was as bleak three weeks ago as the sentiment appears to be now.
In addition, discussions of the prospect for negative interest rates have been brushed off by Fed officials in recent weeks, but it will be interesting to see if the topic came up in earnest at the meeting.
Initial jobless claims released on Thursday should indicate further slowing in the rate of new filings, but the weekly buildup remains in the millions as some states are still encountering issues with filing. The level of those who continue to receive benefits will remain elevated until hiring resumes.
The Philadelphia Fed manufacturing index for May will be released at the same time as initial claims. If the May Empire State index is any guide, the Philadelphia Fed index will recover some of its April dip but continue to show severe contraction.
Later Thursday morning, Markit will release their flash estimates for national manufacturing and services conditions for May. The readings could show some signs of improvement, in line with the Philadelphia and Empire State measures
Finally, the Conference Board’s measure of leading indicators will show even further contraction in April after a 6.7% decline in March, when business shutdowns only cut into half the month. Almost all of the leading indicators components will be down sharply in April, while the 22 million decline in nonfarm payroll will cause a severe decline in the coincident index.