Home Sales Climb, Jobless Claims Steady: U.S. Economic Takeawaysby and
Purchases of existing homes climb to more than nine-year high
Unemployment-benefit rolls hover near lowest level in decades
What you need to know about Thursday’s U.S. economic data:
EXISTING-HOME SALES (JUNE)
- Contract closings rose to 5.57 million annual rate (forecast was 5.48 million), the most since February 2007
- First-time buyer share of all transactions rose to 33 percent, the highest since July 2012
- Inventories dwindled by 5.8 percent from a year earlier to 2.12 million units, the lowest for a June since 2001
The Takeaway: Purchases of previously owned homes surged with help from first-time purchasers who have been slow to return to the market. Burgeoning wage growth and steady job gains, coupled with low mortgage rates, are giving those entering the market a lift just as investors step away. Demand for the most-expensive properties is strengthening on the back of all-time highs in the stock market that have buoyed wealthier Americans. Keeping a ceiling on sales is super-low supply -- June marked 13 straight months of year-on-year declines in inventories. The group’s chief economist said June may have represented the high-water mark for 2016.
JOBLESS CLAIMS (WEEK ENDED JULY 16)
- Fell by 1,000 to 253,000 (forecast was 265,000)
- Four-week average eased to 257,750 from 259,000
- Continuing claims also declined
The Takeaway: Jobless claims were the fewest since April, when they’d dropped to a four-decade low. For 72 consecutive weeks, claims have been below the 300,000 level that economists say is typically consistent with a healthy labor market. With demand improving and the job market approaching full employment, managers are having a harder time finding skilled and qualified workers to hire, and remain reluctant to let go of the staff they have. The report represents claims from the survey week for July non-farm payrolls, and signal that, at least from the firing side of the equation, the job market remains firm.
BLOOMBERG CONSUMER COMFORT (WEEK ENDED JULY 17)
- Weekly comfort index dropped to 42.9 from 44.7
- July economic expectations rose to 44.5, recovering from a big drop in June that put the measure at the lowest since 2013
- Buying climate gauge fell three points to 38.3 last week, the largest decline since 2011, from 41.3
The Takeaway: A stable job market may not be enough to lift consumers’ outlooks about the economy. Household confidence has see-sawed in the wake of the market turmoil after the British vote to leave the European Union. Meanwhile, the U.S. presidential race will be another source of uncertainty for the rest of the year. These developments first weighed on the economic outlook, and are now seeping into sentiment about purchases and personal finances. Even though the Comfort index suffered its first significant decline of 2016, it’s still having one of the most stable years on record.
PHILADELPHIA FED FACTORY INDEX (JULY)
- Index fell to -2.9 from 4.7 in June (forecast was for 4.5)
- Employment index improved to -1.6 from -10.9
- New orders rose to 11.8 from -3
- Prices paid and received decelerate
The Takeaway: The disappointing headline number, which indicates Philadelphia’s manufacturing industry contracted this month, belies some of the stronger details of the report. Both new and unfilled orders posted gains, while the six-month outlook measure also increased. Although a sharp drop in the capital expenditures index bears watching (and likely indicates some fallout from global-growth concerns), the forward-looking components such as orders were "broadly encouraging" and point to "a more buoyant performance ahead," wrote Millan Mulraine, deputy chief U.S. macro strategist at TD Securities USA LLC in New York.