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More market moving US data events coming up - Nomura

Analysts at Nomura offered their outlooks for the US data ahead while markets also brace for the vote on US tax reform in a full House.

Key Quotes:

"Initial jobless claims: Initial claims rose 10k to 239k during the week ending 4 November. Much of the increase was likely driven by an uptick in Puerto Rico which was affected heavily by Hurricanes Irma and Maria. The Labor Department reported that the ability to take claims has improved in Puerto Rico and they are now processing backlogged claims. The recent increase was likely a delayed reflection of backlogged claims in Puerto Rico. Further, the Labor Department also noted that claims taking procedures continue to be severely disrupted in the Virgin Islands. This region will continue to add to initial claims as recovery continues and backlogged claims get processed. However, these hurricane-driven spikes are likely transitory. We maintain our view that initial unemployment claims will gradually return to their previous downtrend considering the continued strength of the labor market.

Import prices: The divergence between imported core consumer goods prices (excluding food, energy, and autos) and CPI core goods prices suggests that the recent weakness in CPI core goods price inflation may not attributable to an external shock. The core consumer goods import prices have stabilized in recent months, but core goods prices in CPI have been declining in recent months, suggesting that domestic factors may be weighing down inflation. Considering the weaker dollar, we expect steady increases in import prices. Higher oil prices will likely push up import prices as well.

Philly Fed survey: Consistent with our view for the Empire State survey, we forecast an elevated reading for the November Philly Fed survey of 24.0 (Consensus: 24). Our forecasts reflect elevated manufacturing activity in recent months. Similar to the Empire State survey, this would be a slight pullback from the previous month but still highly elevated.

Industrial production: We expect a healthy 0.5% m-o-m increase in October industrial production (Consensus: 0.5%). Industrial activity has been expanding at a solid pace despite some lingering impact from the recent hurricanes. Given improvement in manufacturing activity driven by healthy domestic and foreign demand, we expect a decent increase in ex-auto manufacturing output. Further, a recovery in petrochemical production as more refineries regain their production capacities will likely contribute to ex-auto manufacturing output. Moreover, WardsAutos forecasts suggest that, after seasonal adjustment, auto assemblies will likely increase in October. Elsewhere, mining sector production will likely be weak as the landfall of Hurricane Nate caused outages across many oil production platforms in the Gulf of Mexico. Although the US Energy Information Administration reported that most of these platforms had returned to operation, this transitory decline likely lowered the crude oil output in the month. However, looking through weather-related volatility, crude oil output’s recovery appears resilient. Recent increases in global oil prices will likely contribute to oil output growth.

NAHB housing market index: After rebounding from a hurricane-related decline, we forecast a still-elevated reading of 67 for the November NAHB’s housing market index (Consensus: 68). Rising building material costs and labor shortages will likely remain a concern for home builders. However, given the continued shortage of single-family homes for sale, we expect home builders to remain optimistic overall."

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