Two bits of data to come out after the long holiday weekend. Both not surprising and both still telling the same story — house prices fell 14% from a year ago and though new home sales increased, they fell below expectations. The second bit of economic data relates to the Chicago Fed Midwest Manufacturing Index which fell 1.7 percent, according to Crain’s Chicago, and was revised downwards from the earlier release on March’s numbers. The Midwest Manufacturing Index decline was led largely by the automotive sector (April numbers were down 5.6% in April after having fallen 4.6% in March). The index is a monthly measure of manufacturing output for the five states that comprise the midwest Fed region: Illinois, Indiana, Iowa, Michigan and Wisconsin.
So is there a silver lining? The good news (depending on how you view it) is that the bad news seems to be somewhat contained to the housing and automotive sectors, with only mild decreases in the machinery sector .5 percent whereas the resource sector remained flat. The key will be how well the numbers stay contained to just housing and automotive. The silver lining will start to appear in housing when some of the numbers reported begin to turn the other way. Most analysts seem to feel this will happen during the third or fourth quarter of 2008. The automotive sector is the subject of a couple of recent articles that you can find here and here. But that sector does not appear to show any near term improvement opportunities. Let’s hope those rebate checks start to work their magic soon.