Morning Economic Data With 100% Less Showtunes

Let's start off with the Mortgage Bankers' Association Weekly Application Survey which, if you remember, wasn't all that great last week. The composite index fell 5.5%, the purchase index fell 1.4%, and the refinance index fell 7.7%. Now, this index isn't an eagerly awaited one - at best, it is a leading indicator for new home sales and existing home sales - so we have no particular analyst expectations for it. So I won't even attempt to keep you in suspense. The figures for the week ending February 11 were even worse. The composite index fell a seasonally adjusted 9.5%, the purchase index fell a seasonally adjusted 5.9%, and the refinance index fell a seasonally adjusted 11.4%. On the other hand, the average interest rate for 30-year fixed-rate mortgages fell. Granted, it fell a whopping 1 basis point to 5.12%, but you take your wins where you can.

Nevertheless, based on the results of this survey, we look to be on track for a decrease in new and existing home sales for February. And nobody likes that.

On the subject of home sales, let's turn to the US Census Bureau and the US Department of Housing and Urban Development, for New Residential Construction figures. December had a revised 520,000 housing starts (down from the original estimate of 529,000 starts), and the analysts are looking for 540,000 new homes to begin construction in January. And the survey says? Well, the survey says that January had a seasonally adjusted 596,000 new homes begin construction. Of that, 413,000 were single-family homes and 171,000 were buildings with five or more units. Additionally, 562,000 residential building permits were issued and 512,000 residential buildings were completed.

Next on the agenda? The Producer Price Index.December saw it increase 1.1% (or only 0.2% if you restrain yourself to the core PPI). For January, analysts are expecting a 0.7% increase (with the core holding firm at a 0.2% increase). Turning to the Bureau of Labor Statistics, we learn the following from the latest report:

1. December PPI was adjusted downward to 0.9%
2. January PPI for finished goods rose 0.8%, missing expectations but not by an enormous amount.
3. January core PPI for finished goods rose 0.3%, also missing expectation.
4. January PPI for intermediate goods rose 1.7%.
5. January PPI for crude goods rose 8.8%.

And what does this tell us? This tells us that the finished goods PPI will most likely be increasing substantially over the next few months. You can't have the cost to produce crude goods increase heavily without those costs getting passed along the production chain. Also, it implies that CPI will be increasing in the next few months. So while the Street may not be too concerned about the figures today, they will be looking towards future figures with concern.

Unless I'm missing something important, which is possible.