- Continuing Claims fell to 2484K versus estimates of 2480K and 2523K prior.
- Existing Home Sales for December fell to 6.22M versus estimates of 6.25M and 6.27M in November.
BOTTOM LINE: The number of Americans filing first-time claims for state unemployment benefits rose more than forecast last week from the lowest level in 11 months, Bloomberg reported. The four-week moving average rose to 309,250 from 307,750 the prior week. The unemployment rate held near a five-year low in December and average hourly wages rose 4.2%, almost twice the current inflation rate as measured by the Consumer Price Index. The weekly unemployment rate among those eligible for benefits, which tracks the US unemployment rate, remained steady at 1.9%. According to a recent survey by the National Assoc. for Business Economics, 33% of executives plan to add jobs over the next 6 months, up from 29% the prior quarter. I continue to believe the job market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.
Sales of previously owned homes in the US declined in December after increases the prior two months that point to a gradual improvement in the housing market. The median price of an existing home finished the year at $222,000 and 1.1% higher from 2005 levels. The median home has risen in value by over 50% the last few years. The number of existing homes on the market at the current sales pace fell to 6.8 months’ worth, down from 7.3 months’ worth at the end of the prior month. I continue to believe home inventories will plunge this year back to more normal levels as demand has only fallen half of the amount construction has declined. Existing home sales fell 9.1% in the West and 2.8% in the Northeast. They rose 4.3% in the Midwest and .8% in the South. I still believe that the worst of the housing downturn is over and that it will subtract less from economic growth through year-end and begin adding again in 2008.
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