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, starting with existing home sales.
Existing Home Sales Hit One-Year High
In September, existing home sales jumped 2.4% to an annual rate of 5.17 million units. This surpassed economists’ estimates of a 5.10 million unit pace. September’s results also represented a sharp reversal from August’s 1.8% decline to a 5.05 million annual rate. While existing home sales hit its highest pace of 2014, it’s still 1.7% below last September’s levels. The housing market continues its slow recovery, but there are bright spots. Last, week the 30-year mortgage rate dropped due to declining U.S. Treasury yields and this should encourage more Americans to buy homes.
Consumer Inflation Remains Tame
In September, the Consumer Price Index (CPI) rose only 0.1%, in line with economist’s expectations. This represented a reversal from the deflationary 0.2% decline we saw in August. In September, food costs rose 0.3% (led by increasing beef prices), while energy prices declined 0.7% (mostly due to a drop in retail gasoline prices). Core CPI, which excludes food and energy prices, increased 0.1%. In the past 12 months, the CPI has risen 1.7%, matching last month’s annual reading. Overall, deflationary fears persist, but have not materialized on the consumer level.
U.S. Jobless Claims Hover Near Record Lows
Last week, new claims for jobless benefits rose 6% to a seasonally adjusted 283,000. . This largely met economists’ estimates. The prior week’s claims were revised up 2,000 to 266,000. Now that the four-week moving average has fallen 3,000 to 281,000, jobless claims are at their lowest level since 2000. The decline in the four-week moving average shows that the labor market continues to gain traction.
Leading Indicators Rise in September
The Conference Board’s leading economic index increased 0.8% in September, after no change in the month of August. This beat analysts’ expectations of a 0.5% increase, and also represents a 1.1% increase since July. In September, nine of the ten economic indicators increased, including the interest rate spread, manufacturing hours, stock prices and building permits. The lone lagging indicator was consumer sentiment regarding future business conditions. It just goes to show that while the stock market has been on a roller coaster ride, the U.S. economy is still experiencing broad-based growth.
New Residential Sales Rise to a Six-Year High
In September, U.S. single-family home sales increased 0.2% to a seasonally adjusted annual rate of 467,000 units. This is up from August’s revised rate of 466,000 units, but missed analysts’ estimates of 475,000. August new home sales were revised sharply lower; earlier the Commerce Department had reported 504,000 in new home sales. Even so, September 2014 sales were up 17% over September 2013. The sales pace in September suggests that it would 5.3 months for the supply of houses in the market to be cleared. The median price for a home sold in September 2014 was $259,000, a 4% decline from a year ago. While the August downgrade was a disappointment, the fact is that new home sales are at a six year high.
That’s all I have for you this week. I’ll be in touch with the latest Portfolio Grader changes and Stock of the Day on Monday.
Have a great weekend,