It’s Friday and that means it’s time to review the latest economic data and identify which pockets of the economy are heating up and which are slowing down. Don’t worry about catching every headline and every report throughout the week—I recap all of the most important news impacting your wealth right here every Friday. Let’s take a look at this week’s big headlines:
Spring Blossoms for LEI
On Monday, The Conference Board announced that the Leading Economic Indicators Index (LEI) rose by 0.8% in March, marking a three-year high. Economists were surprised by the increase; they expected the LEI to rise only 0.5% in March. We’re beginning to see overall economic growth in an uptrend after the harsh winter months halted momentum. The LEI increase is an especially good indicator of consumer demand. In March the US Census Bureau even reported a 1.1% increase in retail sales and a 3.1% increase in auto sales as well. So it seems with warmer weather we’re also finally seeing some positive and much needed growth in the economy.
Existing Home Sales
Existing-home sales were flat in March, while growth in home prices stagnated. Sales gains in the Northeast and Midwest were offset by declining sales in the West and South. Total existing home sales fell 0.2% to a seasonally-adjusted annual rate of 4.59 million in March. This is the lowest level since July 2012. The median existing home price for all housing types in was $198,500, 7.9% higher than a year earlier. The national average commitment rate for a 30-year conventional, fixed- rate mortgage also increased to 4.34% from 4.3% a month earlier. Like many other sectors of the economy, the housing market is expected to gain momentum during the spring and summer as consumer confidence begins to recover from the harsh winter.
New Home Sales
On Wednesday, the Commerce Department announced that new home sales plunged 14.5% in March to an annual rate of only 384,000, which is the slowest pace since last July. Median new home prices have increased 12.6% to $290,000 in the past year and are hindering sales is the West, Midwest and South, while sales in the Northeast continue to rise. In the past 12 months, new home sales have declined 13.3%. However, a broader look into the first quarter shows new-home sales fell just 1.8% compared to last year. The harsh winter continued into March, shutting down many construction sites. When you combine that with a soft housing market, that creates the perfect formula for a dip in sales. There’s also the recovering economy, tight lending standards locking out would be first-time buyers. But with weather finally warming up, there is hope that the housing market will firm up.
Initial Claims for Unemployment
The number of Americans filing for new unemployment benefits spiked last week. Initial claims for jobless benefits increased by 24,000 to a seasonally adjusted 329,000 in the week ended April 19, according to the Labor Department. Economists expected 315,000 new claims; the Labor Department said there were no special factors impacting the data. The four-week moving average of claims rose slightly to 316,750 compared to 354,750 last year. The number of continuing claims for state unemployment benefits—drawn by workers for more than a week—dipped by 61,000 to 2,680,000 for the week of April 12. The latest unemployment claims remains consistent with the economic recovery pace. We’ve seen volatile times in the market and employers slowing down hiring activity during the winter months. Recent indicators point toward economic strength and more employers making an effort to step-up hiring in the month of March.
Durable Goods Orders
On Thursday, the Commerce Department announced that durable goods orders surged 2.6% in March, which is the largest increase in four months and substantially higher than economists’ consensus estimate of a 1.8% rise. Especially encouraging was that durable goods orders rose in every major category, such as orders for computers and electronic products, which surged 5.7%. Also dramatically boosting durable goods orders was that Boeing received 163 orders for new commercial jets, which helped to boost commercial aircraft orders by 8.6%. Excluding volatile transportation orders, durable goods order still rose a very impressive 2%. Also impressive is that orders for core goods rose 2.2%, which is the strongest pace since last November. Overall, the March durable goods report was indicative of resurging GDP growth. The report indicates that consumers are purchasing big-ticket items after pulling back during the harsh winter months.
Have a nice weekend,