Research Team at Nomura, suggests that the Chicago PMI and pending home sales data will be the most important economic releases from the US today.
Key Quotes
“Chicago PMI: The Chicago PMI far exceeded expectations in February, increasing by double digits into expansion territory. However, the Chicago PMI tends to be volatile, so we are skeptical that the strong gains in January signaled a turning point in industrial activity. Indeed many other regional business surveys remained weak in January, and the regional surveys released thus far for February, such as the Empire State, Philly Fed and Richmond Fed manufacturing surveys, all pointed to a contraction in activity in February. Taking these factors into consideration, and the likelihood that the surge in the Chicago PMI index overstated the underlying trend in manufacturing, we forecast that the headline Chicago PMI will decline by 3.6pts to 52.0 in February.
Pending home sales: The market for existing homes gained significant momentum last year. Favorable fundamentals—such as demographics, an improving labor market and income growth, and low mortgage rates—suggest we should see continued recovery in housing. However, the limited supply of for-sale homes could create some headwinds in the near-to-medium term. The pending home sales index leads existing home sales by a couple of months and should give us an indication of the pace of existing home sales in February. Consensus forecasts that the pending home sales index rose by 0.8% in January.”
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