We expect top-line CPI to rise 0.3% MoM with the YoY inflation rate steady at 2.1%. Core CPI likely rose 0.2% MoM with the YoY rate unchanged at 2.0%. In June, prices received by farmers fell -2.6% suggesting overall food prices rose at a slower pace last month. Retail gasoline prices (not seasonally adjusted) rose 0.5%, suggesting a strong rise in energy prices after accounting for seasonal factors. With core CPI likely rising 0.2%, we expected a 0.3% rise in the top-line measure. Both top-line and core inflation rates likely remained unchanged at 2.1% and 2.0%, respectively.
Existing home sales likely rose 1.6% to a 4.97 million-unit rate in June, following a 4.9% increase in May. Pending home sales, which apply to signed contracts that have yet to close, jumped 6.1% in May, as did new home sales which surged 18.6% last month. The 4-point increase in the NAHB Housing Market Index (HMI), led by a rise in current single family sales outlook, will likely be reflected in solid existing home sales in June. Strong May home sales, improved sales outlook and declining mortgage rates suggest a solid rise in June existing home sales.
We look for a slight decline of -3.0% in June new home sales following the 18.6% surge in May. The June decline in new home sales largely reflects a retracement of the surge in May. June data for single-family unit permits, which rose 2.6%, were encouraging, yet housing starts for single-family units posted a drop of -9.2%. As reported in the most recent Beige Book, residential real estate activity varied across districts, with inventories generally low and demand mixed. Several districts cited that low or dwindling inventories were constraining home sales, while other districts reported slight to modest sales increases. This suggests new home sales likely softened on balance, falling from its previous jump.
We expect June durable goods orders to have risen, at 1.0%, retracing its -0.9% May decline. Despite the soft 0.1% rise in overall manufacturing production, durable goods manufacturing rose 0.4% in June. In addition, the new orders outlook in the Empire and Philly Fed June surveys each jumped several points. Boeing posted 109 new aircraft orders, indicating a heightened rate of increase over the past three months. The sizable gain suggests a boost to durable goods orders in June. We will watch for the release of the June Chicago Fed National Activity index on 21 July, as the sales, order and inventories component tracks well with the durable goods report.
