The US unemployment rate, which dropped to a three-year low in April, appears to have levelled off. And in the week ahead, we’ll find out whether the lull has stalled the recovery of the US housing market. Housing, a broad barometer of the nation’s economy, has displayed signs of movement this year following a sluggish 2011. But if the US jobs situation worsens, the housing market could follow.
On July 17th, the NAHB/Wells Fargo Housing Market Index will gauge builder confidence. The index reached a five-year high in June, but its trajectory appeared to be levelling out. “Recent economic reports that have shown some weakening in the pace of recovery likely factored into the marginal gain,” NAHB Chief Economist David Crowe said in a statement.
On July 18th, the US Census Bureau will release data on housing starts. Building permits issued for privately owned homes increased 25% in May, compared with the same month a year ago.
On July 19th, another report will show whether buyers are still active in the existing home market. The National Association of Realtors will release June data. Sales of existing homes rose 9.6% in May compared with the same month a year ago.
The Federal Reserve, meanwhile, may also offer insight about US consumers. Chairman Ben Bernanke will testify before congressional banking and financial services committees on July 17th and 18th. The Fed is expected to keep its benchmark interest rate at almost zero until the middle of 2015 and may consider a new round of bond purchases.
Canada central bank action … or inaction
The Bank of Canada is expected to keep a key interest rate unchanged at 1% at its July 17th policy meeting, despite traders’ growing unease about the euro-zone debt crisis, the US economy’s sluggish recovery and a slowdown of growth in emerging economies, Bloomberg projected.
The European Central Bank recently cut its main interest rates, taking the benchmark to a record low of 0.75% and the deposit rate to zero, and is prepared to make further cuts to maintain price stability.
Traders are increasingly buying into secure currencies such as the Japanese yen and the Swiss franc. The risk averseness pushed down the value of the Canadian dollar against the US dollar.
But Canada’s central bank isn’t likely to change its policy rate to boost Canadian currency, according to The Globe and Mail market review. A lower exchange rate has a stimulating effect on Canada’s export-heavy economy.
Convergence: Revenue recognition, leases
The US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) will discuss all of their remaining convergence projects as they meet together by videoconference and separately in their respective home locations of Norwalk, Conn., and London.
The convergence projects on revenue recognition, leases and financial instruments are on the agenda for joint meetings. The leases project could proceed to a directive for the staff to begin working on an exposure draft; revenue recognition issues to be discussed include clarifying the criteria for identifying separate performance obligations and distinct goods and services.
In a FASB-only meeting July 18th, the board will discuss impairment, and classification and measurement in the accounting for financial instruments project.
Topics for IASB-only discussions will include accounting for macro hedging and review of a staff analysis of an issue regarding IAS 28, Investments in Associates and Joint Ventures, pertaining to the application of an equity method when an associate/joint venture’s equity changes outside of comprehensive income.
Meetings will be held Monday, July 16th through Friday, July 20th.
—From CGMA Magazine staff reports.