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…
Existing Home Sales
Friday’s Existing Home Sales report posted its first gain in the past four months. It rose 0.7% last month to a 5.39 million annualized rate. Median prices fell 3.2% to $245,100, but that’s still a 4.2% year-over-year gain. With only 1.9 million resales on the market, supply is tight. However, even though the yearly rate is down 6.4%, that’s still a 1.6% gain. Sales supply, on the other hand, remains unchanged at 4.2 months.
The only region to see a real decline in sales was the South, which might still be feeling the effects of the recent hurricanes. Houston seems to have recovered. However, sales in Florida were down substantially. In fact, overall the Southern United States was down 0.9% in September. That’s on top of August’s 5.7% decline.
Index of Leading Economic Indicators
On Thursday, the Leading Economic Indicators Report came in at -0.2%, which is well below Econoday’s estimate. This was driven by spikes in jobless claims as a result of the recent hurricanes as well as lower building permits and two factory sector indicators—capital goods orders and the workweek. On a positive note, however, ISM’s new orders index is at a 4-year high. This is signaling unusual strength for the factory sector, and the yield spread is continuing to signal positive effects as well from low short-term interest rates.
Housing Starts and Building Permits
Although single-family permits rose 2.4% to 819,000 and completions were up 4.6% to 781,000, overall housing starts and building permits came in weaker than expected last month. Overall starts fell 4.7% to 1.12 million while permits fell 4.5% to 1.21 million. Multi-family permits fell 16.1% to a rate of 396,000.
Again, regional data is showing weakness in the South, probably as a result of the recent hurricanes. Following an August decline of 4.9%, starts fell 9.3% to 527,000 in that region. We also saw weakness in the Midwest and Northeast, down 20.2% to 154,000 and 9.2% to 119,000 respectively.
Tuesday’s Industrial Production report revealed continued weakness in manufacturing. The factory sector only managed a 0.1% increase in September, which is only the second gain in five months. However, the report’s other two main components finally brought us positive numbers again. Mining was up 0.4%, and utilities are up 1.5%.
Manufacturing production only saw a 1.0% gain year-over-year. This was heavily weighted down by a 3.2% year-over-year decline in motor vehicles and parts buoyed only by a 0.1% gain for the month. The hi-tech component, however, saw a 1.7% gain this month for a yearly gain of 2.3%.
That’s all I have for you this week. I’ll be in touch again next week with the latest ratings updates out of Portfolio Grader.
Have a great weekend,