Economic data

Nov Pending Home Sales rose 7.3%, much better than expectations of a gain of 1.5% and follows a 10.4% rise in Oct. All 4 regions of the country saw gains in contract signings with the West showing the biggest rise. The NAR chief economist is saying some of the gains may be “from buyers recommitting after an initial contract ran into problems, often with the mortgage.” The NAR is also saying that historical pending home sales are not being readjusted as with the existing home sales data as the calculations of both use different methodologies. Bottom line, whether due to even lower prices, historically low mortgage rates, falling inventory and a better tone to the labor market or a combination of all, the housing market is showing signs of stabilizing. I say stabilize instead of bottom as its too early to make that claim just yet with still a huge amount of foreclosure that hasn’t worked its way through the judicial system and prices that haven’t likely stopped going down as a result.

Following the better than expected NY and Philly mfr’g surveys and weaker than forecasted Richmond and Dallas mfr’g reports, the Chicago PMI at 62.5 was 1.5 pts above estimates but flattish with Nov. New Orders fell to 68 from 70.2 but that’s off the best since March. Backlogs rose 2.8 pts to the best since April. Employment rose 1.7 pts but after falling 5.4 pts in Nov. Inventories fell 1.4 pts to 52.2. Prices Paid rose 5.5 pts to back in line with the 6 month average. Bottom line, in light of the concerns with Europe, manufacturing is still hanging in there but the ISM next week needs to be seen to both reconcile the regional surveys but to also show us the all important EXPORT component which the regional reports don’t have.

Initial Jobless Claims totaled 381k, 6k more than expected and up from 366k last week (revised up by 2k). To smooth out the recent level due to the holiday and unusual seasonals, the 4 week average fell to 375k from 381k, the lowest since June ’08. Continuing Claims rose by 34k but Extended Benefits fell a net 8k. With another extension of unemployment benefits agreed upon before the expiration of the current one, we’ll thus see no disruption in the claims data. Bottom line, initial claims are running below 400k now for the 7th week in the past 8 but it still doesn’t answer the question of when the pace of hiring’s will pick up to a higher and more sustainable level from where we’ve been.

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