First-quarter earnings season is a distant memory, and we’re still six weeks away from the next torrent of earnings reports. To fill that vacuum many investors will be focusing on economic data points that will be released in the coming week.  Here’s a look at three items to watch:

US home builder sentiment

Every month, the National Association of Home Builders reports its housing market index, which seeks to track purchasing and traffic trends. We’ll get the latest reading on Tuesday afternoon. As you’d imagine, that index has been flashing red for several years. Any reading below 50 implies that it’s still tough out there. But maybe it’s getting better. The index has steadily risen from nine in March to 14 in April to 22 in May.

Many will suggest that the improved readings are purely a function of tax credits that have just expired. So most expect that this reading will pull back for the month of June. Perhaps not. After all, real estate purchasing decisions are a function of two factors: consumer finances and psychology. We know that finances are slowly starting to improve, as new job creation has begun in earnest. (The headline unemployment number isn’t dropping yet, only because discouraged job seekers have begun to search for jobs again, swelling the ranks of those actively seeking work).

More important, consumers are rebuilding their balance sheets. Growth in consumer spending is lagging income gains, which means that consumers are choosing to save rather than spend. Some of them may be choosing to save for a downpayment on a house or a condo. In many markets, housing prices are downright cheap, and borrowing costs are near multi-decade lows. The June homebuilder index may prove to be uninspiring, but we may be closer to a turn in housing than many realize – if job creation can be sustained.

Inflation remains quiescent

In the middle of the week, we’ll get the latest readings on inflation — at the producer level on Wednesday, and the consumer level on Thursday. The specter of rising inflation, and its concomitant impact on interest rates, is seen as far off right now (unless you talk to gold bugs). So these readings should be benign. Economists expect prices at the producer and consumer level to fall -0.4%, and -0.2%, respectively. #-ad_banner-#

The recent weakening of the Euro underscores that sentiment. Goods made in Europe are likely being marked down for export sale. Then again, European imports account for less than 5% of the U.S. economy. But here’s the problem with economic data. When everyone reaches a consensus about a particular economic trend, any deviation can shock the market. The odds of an inflation surprise are small, but always worth monitoring – especially since stocks are pricing in a zero-inflation environment.

Capacity utilization

Inflation is likely only to return once our economy is running at its full potential. So economists like to gauge the monthly measure of how our nation’s factories are operating. Once factory output exceeds 80% of theoretical capacity, then bottlenecks start to appear, leading some industries to push up prices. We’re not there yet. Economists think the reading, set for release on Wednesday, to be at 74.5%. That’s up from 70.0% last year, and 73.7% from the previous month. But if that figure keeps rising, the Federal Reserve may feel compelled to start raising interest rates. And once the Fed starts boosting rates, stocks can fall out of favor. Generally speaking, stocks underperform when rates start to rise, though they outperform historical averages when investors get a sense that rate hikes are near an end.

Action to Take –> These economic data points may appear benign. And that’s exactly what investors expect. But they may the hold the clue to nascent trends that may cause a ruckus several months down the road. You should track each of these data points as they are released in the middle of every month.