Vital Signs for the Week of Nov. 21


It should be a quiet week on the economics front. The stream of economic data generally slows to a trickle heading into the later stages of a month, but the Thanksgiving holiday means the upcoming week will offer a dearth of market-moving reports.

The data coming out should reaffirm recent indications that the economy is regaining some momentum, particularly in manufacturing. The November survey of factory activity from the Federal Reserve Bank of Richmond comes on the heels of a generally positive October industrial production report. Factories rebounded strongly from the Boeing (BA) strike and hurricane-related disruptions. Manufacturing output jumped 1.4%, after a 0.7% dip in September.

The November Philadelphia and New York Fed factory activity surveys moved in different directions when it came to current conditions, but respondents in both regions now feel more upbeat about the first half of 2006. A brighter outlook should also be reflected in the Conference Board's leading index for October.

The Richmond Fed's survey will also shed some light on price pressures confronting manufacturers and whether they are finding it easier to pass along higher costs. The October report revealed that factories were getting squeezed even further. The October consumer sentiment report also showed U.S. households were feeling the pinch from higher energy prices. According to the University of Michigan, consumers were downbeat about their personal financial situation. The final Nov. figures will reveal whether the retreat in gasoline prices have consumers feeling a little jollier just in time for the holiday shopping season.

The bond market will close early on Wednesday, Nov. 23. All financial markets will be closed on Thursday, Nov. 24 and close early on Friday, Nov. 25 in observance of the Thanksgiving holiday.

Here's the weekly economic calendar.

EARNINGS REPORTS

Monday, Nov. 21

Campbell Soup, and more.

LEADING INDICATORS

Monday, Nov. 21, 10 a.m. EDT

The Conference Board's September composite index of leading economic indicators probably rebounded 0.8% in October. That's the median forecast of economists from Action Economics. The September leading index dropped 0.7%, after 0.1% slips in both August and July. The June index jumped 1.1%. The September leading index was up 1.2% compared with the same period a year ago, a slowdown from the 1.9% pace in August, and 2.1% in July.

Back in June the index contained changes. The most significant alteration was how the spread between the 10-year Treasury bond and the Fed funds rate effects the leading indicators index. The yield curve will have a negative impact on the index only if it inverts. In other words, if the Fed funds rate is higher than the 10-year Treasury rate. A smaller positive gap between the long-term and short-term rate just means a smaller positive contribution.

EARNINGS REPORTS

Tuesday, Nov. 22

Albertson's, Brown-Forman, Deere & Company, Dollar General, and more.

ICSC-UBS STORE SALES

Tuesday, Nov. 22, 7:45 a.m. EST

This weekly tracking of retail sales, compiled by the International Council of Shopping Centers and UBS bank, will update buying activity for the period ending Nov. 19. Retail sales slipped 0.6% during the week ended Nov. 12, after posting a 1% jump in the prior week and a 0.4% gain in the week ended Oct. 29.

INSTINET REDBOOK RESEARCH STORE SALES

Tuesday, Nov. 22, 8:55 a.m. EST

This weekly measure of retail activity will report on sales for the third fiscal week of November, ended Nov. 19. Comparing the first two weeks of November to the same period in October, sales were up 0.2%. For the entire month of October, store sales were up 1.3% from September.

RICHMOND FED SURVEY

Tuesday, Nov. 22, 10 a.m. EST

The Richmond Federal Reserve Bank will release the November survey of business conditions within its district. The region's manufacturers showed additional optimism in October with a reading of 12. The headline shipments index improved to 8 in September, from 3 in August, and -3 in both July and June.

The shipments index stood at 14 for October, after jumping up to 15 in September, from 8 in August. The new orders index improved to 15, from 8 for September, while the unfilled orders index turned positive, to 2, for the first time since August, 2004. Overall, the figures almost uniformly show an uptick in activity. The average workweek showed some weakness, falling to -9, from 14 in September.

Better current conditions appeared to brighten manufacturers view of the coming six months. The shipments index shot back to 24, from 10 in September, and 23 in August. The new orders, unfilled orders, and capacity utilization indexes also improved.

Pricing power remains an issue among manufacturers. The Richmond Fed's survey showed manufacturers saw prices for materials and goods rose by an annualized 3.87% in October, the biggest monthly increase on record. At the same time, the prices respondents received also rose, but by a much smaller annualized pace of 1.82%. Expectations for the next six months showed some improvement, with prices received expected to increase by an annualized pace of 3.25% vs. 4.39% for prices paid.

FOMC MINUTES

Tuesday, Nov. 22, 2 p.m. EST

The Federal Reserve will release the minutes of the Open Market Committee meeting held on Nov. 1. Starting this year the Fed has released the minutes three weeks after a monetary policy meeting.

The minutes will be useful to see if the Fed has tweaked its view on energy prices and potential pass-through affects into the rest of the economy. In the Nov. 1 post-meeting statement, the central bank reaffirmed its view that the negative economic impact from this year's round of hurricanes, in terms of depressed output and accelerated inflation, should prove temporary.

Fed watchers believe the central bank will keep rising rates in order to stay ahead of potential price pressures. The consensus is for the fed funds rate to stand at 4.5% after the Jan. 31 Open Market Committee meeting.

EARNINGS REPORTS

Wednesday, Nov. 23

Patterson Dental, and more.

MORTGAGE APPLICATIONS

Wednesday, Nov. 23, 7 a.m. EST

The Mortgage Bankers Assn. releases its numbers on mortgage applications for both home buying and refinancing for the week ending Nov. 18. The purchase index rose once again, to 477.9, from 465.7 for the week ended Nov. 4, and 437.6 in the week ended Oct. 28. The recent uptick may be a sign of potential homebuyers jumping in before mortgage rates climb any higher. The four-week moving average edged down 461.9, after easing to 468.4 during the week ended Nov. 4.

The average rate on a conventional 30-year fixed mortgage, according to HSH Associates, kept on climbing. For the week ended Nov. 10, the rate was 6.48%, up from 6.41% in the week ended Nov. 4, and 6.29% during the week ended Oct. 28.

The MBA's refi index is feeling the effects of higher mortgage rates, dropping to 1702.4 over the week ended Nov. 11, after falling to 1798.8 during the period ended Nov. 4. The four-week moving average declined yet again, to 1820.2, from 1918.5 for the period ended Nov. 4, and 1970.1 in the prior week.

JOBLESS CLAIMS

Wednesday, Nov. 23, 8:30 a.m. EST

First-time claims for jobless benefits for the week ended Nov. 19 are expected to be 310,000, according to economists surveyed by Action Economics. Jobless claims unexpectedly trimmed down to 303,000, from 328,000 for the week of Nov. 5, and 325,000 for the week ended Oct. 29. The fall bodes well for November employment figures and indicates that the October numbers were still influenced by weather-related issues.

The latest decline pulled the four-week moving average down to 321,500, from 335,000 in the week ended Nov. 5. Continuing jobless claims for the week ended Nov. 5 held at 2.79 for a second straight period, from 2.8 million in the week ended Oct. 22.

CONSUMER SENTIMENT INDEX

Wednesday, Nov. 23, 10 a.m. EST

The University of Michigan's Survey Research Center will report its final reading of consumer sentiment for November. The median forecast from Action Economics calls for a reading of 80.7, up a little from the preliminary reading of 79.9, but a nice rebound from the final October reading of 74.2. The final September reading was 76.9, a big decline from the August level of 89.1 and 96.5 in July.

Now that gasoline prices and oil prices have cooled down a bit, a possible adjustment in consumer inflation expectations bear watching. The national average for a gallon of gasoline was $2.30 on Nov. 14, the lowest price since early July. In September, consumers ratcheted up their inflation estimate for the coming year. The higher energy prices also left respondents feeling more negative about their financial prospects. According to the University of Michigan, about a third of respondents in the October survey said their financial situation had worsened.

HELP WANTED ADS

Wednesday, Nov. 23, 10 a.m. EDT

The Conference Board releases its October index of help-wanted ads, based on ads culled from major newspapers across the nation. The national index edged up to 39 in September, from 38 in August, but remained just below the July level of 40. A year ago, the index was at 36.

The percentage of markets with a rising want-ad volume perked back up to 39%, after plunging to 22% in August, from 79% in July. Help-wanted advertising fell in six of the nine U.S regions during the past three months, a little better than the seven our of nine for the three month period ended in August.

The latest data is partially skewed by Hurricanes Katrina and Rita. According to the Conference Board, ad volume increased sharply in the West South Central states, which includes Louisiana and Texas. By James Mehring


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