EU Int'l. Trade, U.S. NY Fed Index And NAHB HMI

The week begins with a light day for economic news, although Monday's available data releases are worth watching, including international trade numbers for the eurozone. In the U.S., updates are scheduled for the NY Fed Empire State Manufacturing Index and the NAHB Housing Market Index.

EU Merchandise Trade (09:00 GMT): Exports are one of the few pieces of hard data that are trending positive for the eurozone in recent months. The 17 European nations that use the euro collectively, exported two to three percent more each month during this year’s first quarter. In the wake of last week’s surprisingly positive update on April industrial production for Europe, the market will be eager to learn if today’s merchandise trade figures offer similarly upbeat news.

Imports, by contrast, have slipped in recent months, which is no surprise, given the weakness in internal demand in the European Union outside of Germany. But the improving trend in exports suggests that European Central Bank (ECB) president Mario Draghi’s recent forecast that “Euro area economic activity should stabilize and recover in the course of the year, albeit at a subdued pace” may be more than just talk.

U.S. NY Fed Empire State Manufacturing Index (12:30 GMT): Industrial and manufacturing activity have been slowing in recent months, and Friday’s update on industrial output for May was no exception. The Federal Reserve’s industrial production index was flat last month after falling a revised 0.4 percent in April. Will the weakness in the industrial sector spill over into June? It's too early to say, although today’s report from the NY Fed will provide an early hint.

Unfortunately, the trend for this regional index doesn’t look encouraging. The Empire State Manufacturing Index has declined in each of the past three monthly updates, echoing a similar path for the sector on a national basis per the ISM Manufacturing Index. Another weak data point in today’s release would imply that the June ISM update (scheduled for July 1) for the U.S. overall will remain soft. The optimistic view is that it’s all just a temporary bout of sluggish activity for manufacturing that will soon give way to stronger numbers, or so last week’s upbeat retail sales report for May suggests. Today’s number will bring the first of several tests for that theory.

U.S. NAHB Housing Market Index (14:00 GMT): Confidence among home builders improved in May for the first time in five months, according to this index from the National Association of Home Builders. That’s an encouraging sign that tomorrow’s update on housing starts for May will hold steady, if not improve.

“Builders are noting an increased sense of urgency among potential buyers as a result of thinning inventories of homes for sale, continuing affordable mortgage rates and strengthening local economies,” the NAHB chairman advised in a press release with last month’s HMI numbers. He pointed out that all three components of this index improved in May: current sales conditions, sales expectations and traffic of prospective buyers. The renewed strength offers a compelling signal for expecting that today’s number will rise a bit further. In that case, recent worries about the housing market’s momentum will fade.