Moody's Economy.com Survey of Business Confidence
Global business sentiment is much improved during the past three months. Most notable is the optimism regarding the economic outlook toward the end of this year. Assessments of current business conditions and the strength of sales have also measurably improved. Confidence is still weak and fragile, however, consistent with an ongoing global recession. Businesses continue to cut jobs and inventories, and pricing remains very soft.

The Conference Board Leading Indicators +1.2%
The index of leading indicators surged in May for a second straight month, supporting the view that the economy is stabilizing. The 1.2% rise was led by stock prices, consumer expectations, the yield curve, and manufacturing supplier delivery times. The index is up 8.4% at an annual rate over the last three months. Not since mid-2004 has the index increased this quickly. 

Risk of Recession 38%
The chance that the U.S. will be in recession in six months inched slightly lower to 38% in May, compared with April's 41%. The risk of recession has steadily declined since November as the recession is showing signs of moderating. New-home construction and vehicle sales appear to have bottomed while financial market conditions are gradually improving. Real GDP is forecast to decline 2.8% at an annual rate in the second quarter, an improvement from the -5.7% in the first three months of the year. The economy will rebound in the second half of this year, but the initial recovery will be slow before gaining momentum in 2011 and 2012.  

Treasury International Capital Flows -$44.2 B
Net long-term TIC flows in April slowed to $11.2 billion from $55.4 billion in March as private foreign investors reduced their net holdings of corporate bonds and foreign official institutions reduced their net holdings of government agency bonds. Foreign investors are still buying up U.S. Treasury bonds and notes, with net purchases still resilient.

 

Current Account -$101.5 bil
The U.S. current account deficit narrowed by 34.5% to $101.5 billion in the first quarter of 2009, compared with the revised fourth quarter deficit of $154.9 billion. Moody's Economy.com had expected a much greater narrowing of $86.2 billion, in line with most other forecasters. The trade deficit narrowed to $91.2 billion, while the surplus on income narrowed to $32.8 billion.

Consumer Price Index +0.1%
The top-line CPI increased by 0.1% in May, a hair higher than expectations, and is down by 1% from May 2008. The core CPI also increased by 0.1% in May, a deceleration from April when it increased by 0.3%. The core CPI is now up by 1.8% from May 2008. Energy prices increased by 0.2% for the month as oil and gasoline prices seem to have stabilized, while food prices fell by 0.2%. Although CPI inflation remains positive, May's numbers indicate that the danger of deflation is still present.

Oil and Gas Inventories -3.9 bbl
Crude oil inventories fell by 3.9 million barrels during the week ending June 12, according to the Energy Information Administration, below expectations of a 1.2 million barrel decline. Gasoline inventories rose by 3.4 million barrels, well above expectations of a 550,000 barrel build. Distillate inventories rose by 0.3 million barrels. Refinery operating capacity was unchanged at 85.9%. Total domestic petroleum demand rose modestly. This report supports points of a rise in oil prices.

MBA Mortgage Applications Survey - 15.8%
In the week ending June 12, the MBA market index slipped again, despite a decline in contract rates. The market index fell 15.8% to 514.4. Similarly, both components fell. The purchase index decreased 3.5% to 261.2. Meanwhile, the refinance index continued its quick plummet. Down another 23.3%, the refinance index is now 1,998.1.

Industrial Production: -1.1%
Industrial production fell sharply again in May but, as in April, at a slower pace than earlier in the year. Total production declined 1.1%, and manufacturing production fell 1%. Manufacturing is on track to fall 10% at an annual rate this quarter, about half the pace of decline last quarter. Although production should grow more in line with sales soon, further moderating the declines in output, incoming manufacturing surveys for June are mixed on whether the improving trend is continuing.

Producer Price Index: 0.2%
Producer prices for finished goods rose in May (0.2%), almost entirely because of rising prices for energy products. When food and energy prices are excluded, core prices fell slightly (-0.1%), marking the first decline since October 2006. Demand is weak, and there is little inflationary pressure left in the pipeline. Core prices among intermediate products fell for the eighth month in a row (-0.2%).
 
NAHB Housing Market Index -6.3%
The NAHB housing market indicator came in below expectations for June, scoring a 15 compared with the May level of 16, a 6.3% drop. Although both the present single-family sales and prospective buyer traffic components held level between May and June, there was a slight drop in the expected six-month sales component, most likely caused by the jump in mortgage interest rates over the past months. It is thus possible that the increase in interest rates is already starting to sap confidence in prospects of a housing market recovery.

New Residential Construction (C20) +17%
Housing starts increased as expected, but the gain was a surprisingly strong 17% in May compared with April. At 532,000 annualized units, starts are back up to their March pace. Multifamily starts are driving the rapid gain, but single-family starts also increased nicely. Permitting is up as well, while completions are down slightly. Overall, this report is consistent with a bottom in residential construction.

Chain Store Sales Snapshot: -0.6%
Chain store sales fell 0.6% in the week ending June 13, as the ICSC sales index is trending downward. Sales were 1.5% below their year-ago level, the worst performance in seven weeks. The ICSC blamed cooler than normal weather and rising gasoline prices for the poor performance.