Durable Goods Orders Soar, Help-Wanted Index at 45-year Low, New Home Sales Rise Again

- Durable Goods Orders for September rose 7.8% versus estimates of a 2.0% gain and a .1% decline in August.
- Durables Ex Transports for September rose .1% versus estimates of a 1.0% increase and a 1.5% decline in August.
- Initial Jobless Claims for last week rose to 308K versus estimates of 307K and 300K the prior week.
- Continuing Claims rose to 2449K versus estimates of 2440K and 2446K prior.

BOTTOM LINE: US Durable Goods Orders rose last month by the most in more than six years on demand for commercial aircraft and business equipment, Bloomberg reported. Bookings for commercial aircraft surged 183% in September, the largest increase since July 2002. Unfilled orders for non-defense capital goods excluding aircraft rose 2.3%, the largest increase since June 2000, implying production increases in coming months. Business spending is projected to surge 7.8% this year, according to a recent survey from Blue Chip Economic Indicators. I expect Durable Goods Orders Ex Transports to rise more next month.

The number of Americans filing first-time claims for unemployment benefits rose last week to a level that still suggests a healthy job market, Bloomberg reported. The four-week moving-average of jobless claims fell to 305,250, the lowest level in eight months. The unemployment rate among those eligible to collect benefits, which tracks the US unemployment rate remained steady at a low 1.9%. The Help Wanted Index fell to 30, a 45-year low. I continue to believe the labor market will remain healthy without generating substantial unit labor cost increases over the intermediate-term.

New Home Sales in the US unexpectedly rose for a second month in September, Bloomberg reported. Purchases increased at a 5.3% annual rate from the prior month. The median price of a new home fell to $217,100. The report suggests that builder incentives, lower mortgage rates and lower prices will keep the slowdown from deepening, Bloomberg said. Alan Greenspan reiterated his view this morning that the worst of the housing slowdown is behind us. Inventories of new homes fell meaningfully. The supply of homes at the current sales rate dropped to 6.4 months’ worth from 6.8 months the prior month. Freddie Mac recently said the average 30-year fixed mortgage rate fell from 6.8% in July to 6.36%. New Home Sales soared 24% in the West and rose 6.9% in the South. Sales fell 35% in the Northeast and 6.3% in the Midwest. I continue to believe the housing market is in the process of stabilizing at relatively high levels. The median US home has still appreciated over 50% since 2000.