Market Mover - BNP PARIBAS - Investment Services India

Key Data Preview
Chart 11: US: Housing Starts & Building Permits
Source: Reuters EcoWin Pro
Jan (f) Dec Nov Oct
Housing Starts
(000s, saar) 580 557 580 524
Key Point:
Housing starts are forecast to increase by 4.1% m/m
in January to 580k annualised units.
BNP Paribas Forecast: Small Increase
US: Housing Starts (January)
Release Date: Wednesday 17 February
After troughing in spring 2009, housing starts picked up
during the summer months and then stalled towards the
end of the year. We forecast starts will resume their
moderate upward trend going forward, although at a much
slower pace than during previous cycles, and will reach
580k in January. Inventories of new homes have declined
noticeably in recent months, suggesting a pick-up in
activity. Nevertheless, record foreclosures and
unemployment near a 26-year high represent hurdles that
may prevent the industry from strengthening much further.
Building permits unexpectedly jumped 10.9% in December,
signalling gains in housing will be sustained into 2010.
Nonetheless, there is some anecdotal evidence that the
leap in building permits at the end of 2009 was due to
builders submitting applications in anticipation of cost
increases in 2010. Thus, we expect a longer lag between
permits and starts and the recent increase in permits to
feed through to starts over the next three months.
Chart 12: US Industrial Production
Source: Reuters EcoWin Pro
Jan (f) Dec Nov Oct
Ind. Prod. (% m/m) 0.9 0.6 0.6 0.2
Cap. Util (%) 72.8 72.0 71.5 71.0
BNP Paribas Forecast: Another Solid Gain
US: Industrial Production (January)
Release Date: Wednesday 17 February
Industrial production is expected to surge 0.9% m/m in
January after solid 0.6% gains in December and
November. Our forecast would imply an increase in
capacity utilisation to 72.8%, the highest reading since
November 2008. The gains should be broad-based,
reflecting the strength in the January ISM and
manufacturing hours worked. A number of sectors appear
to have worked off excess inventories, allowing firms to
ramp up production. Auto production is expected to be a
positive factor as is utility output: Data on electricity
generation showed a further increase on continued cold
temperatures. Mining activity should also see a moderate
gain as this sector benefits from the more robust recovery
in many emerging markets.
Key Point:
Industrial production is expected to rise 0.9% in
January, leading capacity utilisation to increase to
72.8%.
Market Economics 12 February 2010
Market Mover
52
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