European MarketsAfter seeing some strength in Monday’s morning session, the major European markets have given back their gains following the release of the U.S. housing starts report. The French CAC 40 Index and the German DAX Index are moving down 0.26% and 0.35%, respectively, while the U.K.’s FTSE 100 Index is declining 0.02%.
In corporate news, U.K. grocery chain J Sainsbury said its first quarter like-for-like sales, excluding fuel, rose 1.1% year-over-year. The sales growth slowed from the 7.8% rate in the year-ago period.
On the economic front, the Nationwide Building Society reported that its consumer confidence index for the U.K. slid to 65 in May from an upwardly revised reading of 75 for April. Economists had expected a more modest drop to 72.
A report released by the U.K. Office for National Statistics showed that the number of jobseeker’s allowance in the U.K. fell by 30,900 to 1.48 million in May, marking the first time the claimant count had fallen below the 1.5 million mark since March 2009. In the three months to April, the unemployment rate in the U.K. rose 0.1 points from the previous three-month period to 7.9%. The average total pay including bonuses rose by 4.2% year-over-year in the three months to March.
The final consumer price inflation report released by Eurostat showed that the euro area’s inflation rate rose to 1.6% in May from 1.5% in the previous month. The increase came in line with expectations.
Hourly labor costs of the euro area grew a working day adjusted 2.1% year-over-year in the first quarter, faster than the 1.7% growth in the previous quarter, a separate report released by Eurostat showed. Economists had expected an increase of 2.1%. In the same period last year, labor costs had risen 3.1%.
U.S. Economic ReportsA Commerce Department report showed that housing starts fell 10% month-over-month to a seasonally adjusted annual rate of 593,000 in May from the previous month’s downwardly revised rate of 659,000. Economists had expected starts to decline to 655,000 from the originally reported rate of 672,000 for April.
Single-family starts fell 17.2% to 565,000, while starts of units in buildings with five units or more were at 112,000. Meanwhile, building permits, an indicator of future housing activity, declined 5.9% to 574,000.
Meanwhile, producer prices fell 0.3% month-over-month in May following a 0.1%drop in the previous month. Economists had expected the headline index to show a steeper 0.5% decline. The core consumer price index rose 0.2% compared to the 0.1% growth expected by economists.
Food prices fell 0.6% compared to the 0.2% drop in the previous month, while energy prices fell 1.5%. Prices of intermediate goods rose 0.4%, while prices of crude goods fell 2.8%.
The industrial production report of the Federal Reserve is due out at 9:15 AM ET. Economists estimate a 0.8% increase in industrial production in May, while capacity utilization is expected to come in at 74.4%.
Industrial production growth continued to outperform, with output rising 0.8% month-over-month in April following an upwardly revised 0.2% increase in March. Machinery output rose 2.6%, helping to offset the 2.2% decline in the production of motor vehicle/parts and a 1.3% decline in utility output.Mining output was up 1.4% and computer/electronics output rose 0.8%. Capacity utilization rose six-tenths of a percentage point to 73.7%, its highest level since November 2008.
The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended June 12th at 10:30 AM ET.
The inventory report for the week ended June 4th showed that crude oil stockpiles fell by 1.8 million barrels to 361.4 million barrels. Despite the drop, inventories were above the upper limit of the average range.
Gasoline stockpiles were unchanged at 219 million barrels, remaining above the upper limit of the average range. Meanwhile, distillate stockpiles rose by 1.8 million barrels and remained above the upper boundary of the average range. Refinery capacity utilization averaged 89.1% over the four weeks ended June 4th compare to 87.5% in the previous week.
Philadelphia Federal Reserve Bank President Charles Plosser is scheduled to take part on a panel discussion at an academic forum on fixing the financial system, in New York at 2:15 PM ET.
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