- Final 3Q Unit Labor Costs fell 1.0% versus estimates of a .9% decline and a prior estimate of a .5% decrease.
- Factory Orders for October rose 2.2% versus estimates of a 2.3% increase and an upwardly revised 1.4% decline in September.
- Pending Home Sales for October fell 3.2% versus estimates of a 1.2% decline and a downwardly revised 1.0% fall in September.
BOTTOM LINE: The productivity of US workers rose from July through September at the fastest pace in two years and labor costs dropped for a second quarter, easing concern that rising wages will fuel inflation, Bloomberg said. Moreover, 2Q unit labor costs were revised from a 1.8% increase to a 1.2% decline. Contained labor costs, the largest component of inflation, and the jump in productivity should all the Fed to make increasingly dovish comments going forward.
US factory orders increased for the second time in three months during October as the Gulf Coast recovered from hurricanes, suggesting production gains will fuel the economy in coming months, Bloomberg said. Unfilled business equipment orders rose 1.6% to the highest on record, implying demand was larger than manufacturers’ ability to produce. Commercial aircraft orders surged 51.0%. Orders for capital goods excluding aircraft, an indicator of future activity, gained 1.4%. The inventory-to-shipments ratio dropped to 1.17 months from 1.18 months in September.
Contracts to buy previously owned US homes fell more than expected in October as rising prices and borrowing costs pushed buyers out of the market, Bloomberg said. The Pending Home Sales Index has averaged 125.4 this year versus 120.03 last year. Moreover, sales of new and existing owned homes are still headed for another record year, the fifth in a row. I continue to believe the housing market is slowing to more healthy sustainable levels, not collapsing. This should also allow the Fed to become more dovish.
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