NEWS / Foreign Exchange

Retail Sales, CPI, Housing Starts and Industrial Production

Retail Sales & Excluding Autos (March, Monday 8.30 am)

Forecast: 0.5, 0.6% Consensus: 0.4, 0.7% Prior: 0.1, -0.1%
Higher gasoline prices inflated retail sales in March. Prices at the pump averaged $2.66 per gallon, 9.3% higher than in February. On the contrary, auto sales probably subtracted to retailing in March. According to Bloomberg figures, auto sales declined 1.8% to a seasonally adjusted annual rate of 16.3 million units. Excluding autos and gasoline, we expect sales to remain robust mainly supported by solid employment and income gains.

Headline CPI & Core (March, Tuesday, 8.30 am)

Forecast: 0.7, 0.2% Consensus: 0.6, 0.2% Prior: 0.4, 0.2%
March??™s CPI inflation will surge to 0.7% boosted by higher gasoline prices. This will take the twelve-month change to 2.8% from 2.4% in the previous month. Core inflation however, will remain steady at 0.2% with the twelve-month change easing to 2.6% from 2.7% in February. We continued expecting core inflation to ease gradually. Recently, labor market conditions caused a modest pickup in labor compensations. Nonetheless, pressures from the labor costs side are likely to be contained by sustained productivity gains and robust business profitability. Moreover, these pressures will tend to ease somewhat as economic activity moderates and generates some slack in the labor market. In addition, rents and shelter costs are likely to ease, reflecting an improvement in housing affordability.

Housing Starts & Building Permits (March, Wednesday 8.30 am)

Forecast: 1485, 1493K Consensus: 1500, 1515K Prior: 1525, 1532K
We expect residential construction to continue trending downwards as builders continue working down excessive levels of inventories and the sub-prime-mortgage market crisis threatens to reduce housing demand in the future. These events will cause the pace of housing starts and permits issuance to continue slowing, implying that residential construction will subtract to economic growth in coming quarters.

Industrial Production & CU (March, Wednesaday 8.30 am)

Forecast: 0.2%, 81.9% Consensus: 0.1% 81.9% Prior: 1.0%, 82.0%
We expect manufacturing activity to expand for the second straight month as implied by durable goods orders??™ figures. Orders excluding transportation increased 0.5% in February boosted by a 6.5% rebound in computer and electronic products, while orders of automobile vehicles and parts rose 1.3% in February suggesting an increase in auto production during March. Meanwhile, the manufacturing ISM index continued on an expansionary path in March with an important contribution from the inventories sub-index. We expect industrial production to have increased by 0.2% in March from 1% in the previous month.