Initially, the Conference Board’s consumer confidence index had shown a marked rise of 7 points to 60.6 in January. However, as the Conference Board changed the data provider, the index levels since November have been revised up significantly; the January level was thus 5 points higher than initially shown, even though the mom improvement was scaled back to a mere 2.2 points. Since October, the new index has gained more than 15 points, thus narrowing the gap to the University of Michigan’s (UMI) consumer sentiment index. Much of the improvement is due to the more positive assessment of labour market conditions. The last labour market report for January was a mixed bag, with a sharp fall in the unemployment rate accompanied by a modest rise in nonfarm payrolls. But the downward trend in jobless claims shows that the labour market is picking up. We therefore expect consumer confidence to have increased further in February, but only by 1.4 points to 67.0, given that UMI’s preliminary February consumer sentiment rose by a mere 0.9 points. The ongoing increase in gasoline prices might have prevented UMI’s final February consumer sentiment from improving further; it could thus have remained more or less unchanged at about 75.0.

Existing home sales surged by more than 12% mom in December, possibly because the upward trend in mortgage rates had motivated buyers to bring forward purchases. New home sales actually jumped by 18 % mom in December, and the supply of existing and new homes fell sharply from 9.5 to 8.1 months and 8.4 to 6.9 months respectively. However, the severe weather conditions in January could have caused a setback: existing home sales could have declined slightly from 5.28m to 5.20m and new home sales from 329k to 310k.

Durable goods orders plummeted by 2.3% mom in December, but this was mainly due to a drop in nondefense aircraft orders. Nondefense capital goods orders ex aircraft rose by 1.9% for example, and total durable goods orders ex transportation went up by 0.8% mom. As Boeing already announced a sharp recovery in aircraft orders in December, we expect total durable goods orders to have rebounded by about 3.0% mom in January. The 5.8 point rise in the ISM manufacturing’s new orders component to a seven-year high of 67.8 indicates strong order activity too.

Initial jobless claims rose by 25k to 410k in the week ending 12 February, but adjusted for the fluctuations caused by the weather conditions, the downward trend still seems to be ongoing. We expect initial jobless claims to have fallen to about 400k in the week ending 19 February.

The 2nd estimate for GDP in Q4 is only likely to show minor changes to the growth rate, as the December releases of business inventories and net exports were more or less in line with the assumptions of the Department of Commerce. GDP is expected to have increased by 3.3% qoq annualised and 2.8% yoy in Q4.

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