[ForexNews]

Manufacturing up … consumer & housing down
There is no let-up in the data in the upcoming week and we finish the month with our eye on housing, manufacturing, and the consumer. The housing market is on a bumpy road to recovery and the data this week is likely to reflect as much with prices continuing to deflate and new home sales set for a decline. Conversely, the manufacturing sector is looking a little more solid. It is expected to build on last week's above-consensus Empire and Philly Fed Manufacturing Indices with an improvement in durable goods orders. We'll also be monitoring some of the regional manufacturing surveys coming in from the Fed's District Banks for a timelier read on trends in August. With respect to the consumer, we'll get an updated look at sentiment, which expected to improve modestly. We close out the week with personal income and spending and the short-end of it is: income down and spending flat – hardly inspiring.

Housing not out of the woods yet
The housing data kicks off on Tuesday with the Case-Shiller Home Price Index. In the face of excessive inventories, mounting foreclosures, and a weak economic backdrop, home prices across the 20 major metro areas are likely to decline 0.2% M/M in June. This would take the year-over-year rate to -16.8% in June – still terrible, to be sure, but better than the -19% annual declines. New home sales are released in the middle of the week and with buying intentions weak and credit conditions still tight, as evidenced by the latest Fed's Senior Loan Officer Survey, new home sales are expected to drop 5% M/M to 365K units annualized in July.

Manufacturing moving into expansion mode
We are also likely to get more reasons to call for a 50+ level on the ISM manufacturing survey when it is released September 1st. The Richmond and Kansas City Fed Districts release their regional manufacturing reports this week and analysts expect both to continue signaling a manufacturing expansion. On Wednesday, the July durable goods orders is released and expected to show a 1.8% advance on the back of a surge in aircraft orders (both civilian and defense). However, rising orders for a broader array of goods is also likely to shine through as demand begins to turn more positive across the sector.

Consumers continue to disappoint on spending side
The consumer remains mired in balance sheet repair, which suggests higher savings and lower spending. On Friday, we'll get the personal income and spending report. Personal income likely fell 0.1% M/M in July and while private sector wages and salaries could be up 0.1% M/M (the first increase in a year), they will continue to deflate by close to 7% Y/Y. With the personal savings in an upward trend, we do not expect to see much by the way of spending, which is likely to come in flat. One reason spending has remained under pressure is because consumer sentiment has yet to meaningfully improve. The Conference Board and University of Michigan surveys of consumer sentiment are likely to improve modestly in August but still to historically low levels.