US: Focus on business inventories and NAHB housing data – Nomura

According to analysts at Nomura, US business spending on inventories likely slowed in March from its pace earlier this quarter but remained steady.

Key Quotes

“Manufacturing inventories grew 0.3% m-o-m in March after rising 0.4% in February. Wholesale inventories were up 0.3% m-o-m in March, but gains in January and February were revised down, implying that the inventory accumulation in Q1 was modestly weaker than the BEA’s assumption. The wholesale inventory of metals and minerals excluding petroleum rose sharply by 4.5% m-o-m. This jump likely reflects a pickup in domestic metal prices, partly driven up by tariffs on steel and aluminum imported into the US. Advance retail inventory data were weak but appear consistent with a pickup in sales in March. Altogether, business inventory growth in March was likely more modest than in January and February.”

“NAHB housing market index: Despite strong demand, the NAHB housing market index fell to 69 in April, from 70 in March, driven by modest declines in current and next six months sales. A strong job market and steadily increasing household income will likely support consumer demand. However, supply-side constraints continue to weigh on home builders’ sentiment. It appears rising material costs remain a significant concern. Home builders expressed concerns over rising lumber prices, partly driven by US tariffs on Canadian softwood lumber. For the May report, we expect a steady reading of 69, unchanged from the estimate in April.”