The look ahead: Reports on industry, housing and debates over audit firm rotation

In the week ahead, markets will get a glimpse at the state of manufacturing in Europe, a checkup on the housing situation in the US, and robust discussion on audit firm rotation for public companies in the US.

European manufacturing

Demand for products made in the United Kingdom has strengthened in the two months following a miserable fourth quarter. Results of a long-running survey will give investors clues whether manufacturing executives continue to be optimistic.

The CBI, which represents nearly a quarter million UK businesses and has offices around the world, will release the CBI Industrial Trends Survey on Tuesday. Survey results reflect the executives’ opinions about output, prices, exports and costs.

Survey results in January and February suggested manufacturing output would continue to rise and should contribute positively to UK gross national product in the first quarter.

On Thursday, Markit Economics releases similar data for the EU. Markit’s Purchasing Managers’ Indexes are also based on surveys of selected companies. PMIs track output, new orders, stock levels, employment and prices.

US housing

The US housing industry, a broad barometer of the nation’s economy, has shown some signs of movement following a lethargic 2011. But will sales, prices, new home construction and optimism continue to increase?

  • On Monday, the NAHB/Wells Fargo Housing Market Index will show if this upward streak is continuing. The index, which gauges builder confidence, rose for the fifth straight month in February to a four-year high.

  • On Tuesday, the US Census Bureau releases data on February housing starts. Building permits issued for privately owned homes increased 19% in January, compared with the same month a year earlier.

  • On Wednesday, the National Association of Realtors releases February data for sales of existing homes. In January, sales were up 0.7% compared to the same month a year ago. 

  • On Thursday, the Federal Housing Finance Agency House Price Index will shed light on February home prices. Home prices, which have been firming up in recent months, will be among the double-dip indicators economists will keep an eye on.

  • And on Friday, the US Census bureau releases figures on new home sales for the month of February. New home sales were up 3.5% in January, compared to the same month a year ago.

US audit rotation

Also in the US, one of the most hotly contested issues in accounting and auditing will be debated when the Public Company Accounting Oversight Board (PCAOB) holds an open meeting on auditor independence and audit firm rotation on Wednesday and Thursday in Washington.

The PCAOB’s August 16th concept release asked stakeholders to consider mandatory audit firm rotation as a means to bolster auditor independence and scepticism. Critics, including the American Institute of CPAs, cite studies saying audit firm rotation is costly for companies and has the potential to hinder audit quality.

Former US Comptroller General Charles Bowsher, former US Securities and Exchange Commission Chairman Richard Breeden and former US Federal Reserve Chairman Paul Volcker will open the meeting, which will be available via webcast on the PCAOB’s site, at 8:30 a.m. EDT Wednesday. Business leaders, including directors from Dell Inc. and SanDisk Corp., will join public accounting and audit firm chief executives and educators on the roster of speakers.

The comment period has been extended until April 22nd; comments can be sent from the PCAOB’s website or emailed to