CPI: We expect the headline CPI to have fallen 0.2% m/m on account of sharply lower seasonally adjusted prices for retail gasoline. We look for core CPI to be up a modest 0.1% m/m, as we expect the January strength in core goods to reverse in this month’s release. These changes should bring headline CPI inflation down to 0.9% y/y and keep core CPI inflation unchanged at 2.2% y/y. We look for the CPI NSA index to print at 236.9.
Housing starts: We forecast housing starts to rise 2.0% m/m to 1.12mn units in February. Residential construction disappointed last month, with sluggish single- and multi-family activity across the nation. Despite the weak outturn last month, we still see the US housing market as in recovery mode. A 2% gain in February starts would bring activity back to trend and indicate further gains in the months ahead.
Industrial production: We look for total industrial production to have declined 0.2% m/m in February, with a 0.2% m/m gain in manufacturing output offset by sharp declines in mining and utilities output. Within manufacturing, we expect modest rises in auto assemblies and chemical production to be boosted by a large increase in petroleum refining.
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