There were a few important reports on the U.S. economy released this morning. First, data from the Department of Labor showed that the number of Americans making first-time claims for unemployment benefits totaled 260K in the week ending October 15th. That was a spike of 13K from the prior week’s figure, the largest sequential increase since July, and the highest headline reading in more than a month. However, that was also the 85th weekly print below 300K in a row, one of the longest such streaks on record and a pattern believed to be consistent with an overall healthy labor market. Further, the smoother 4-week moving average of initial jobless claims (+251.75K) remains near the low-end of the historic range, meaning that more data will be needed to know if last week’s sharp uptick was just an isolated event or the start of a new trend. Regardless, initial jobless claims have been remarkably stable this year, implying that any recent slowdown in the pace of nonfarm payrolls growth has been due more to a decline in hiring than an increase in firing.
Elsewhere, a report from the National Association of Realtors (NAR) showed that total existing home sales in America, which account for a much larger portion of the overall U.S. housing market than new home sales, rose by 3.2 percent in September to a seasonally adjusted annual rate of 5.47 million units. That was a much stronger rebound than expected but the August print was revised slightly lower. Regionally, home sales in September rose everywhere last month, with the largest gains being found in the Northeast (+5.7 percent) and out West (+5.0 percent). Over the past year, though, existing home sales have risen by only 0.6 percent, one of the weakest rates of annual growth recorded in 2016. Total housing inventory lifted by 1.5 percent to 2.04 million existing homes available for sale in September, and months’ supply slid to 4.5 at the current sales pace. The median selling price was $234,200 in September, a 5.6 percent gain compared to this same period last year and therefore the 55th consecutive month of annual growth. The solid monthly gain in existing home sales was driven by first-time homebuyers, whose sales share climbed to the highest level in more than four years in September. NAR chief economist Lawrence Yun added that “The home search over the past several months for a lot of prospective buyers took longer than usual because of the competition for the minimal amount of homes for sale. Most families and move-up buyers look to close before the new school year starts. Their diminishing presence from the market towards the end of summer created more opportunities for aspiring first-time homeowners to buy last month.”
Elsewhere, data from the Federal Reserve Bank of Philadelphia showed that manufacturing activity in the Mid-Atlantic region of the country cooled in October, as the general business conditions index slid from +12.8 to +9.7. However, that was actually better than economists anticipated and only the first monthly decline since July. Measures of new orders, shipments, total employment, and hours worked all improved in October but the latter two remained in negative territory (signaling net contraction). Surveyed managers’ outlooks for general business conditions six months from now deteriorated slightly but capital expenditure plans rose markedly. Overall, this report was not too disappointing but it was also the second regional manufacturing index to decline in the month of October, suggesting that there is still no clear end in sight for the “industrial recession” in America that started more than a year ago.
Sources: Econoday, Twitter, Bloomberg, ZH, U.S. DoL, FRBP, NAR, FRBSLPost author: Charles Couch