Thursday, July 17, 2008

Housing Starts Rise, Jobless Claims Increase, Philly Fed Improves

- Housing Starts for June rose to 1066K versus estimates of 960K and 977K in May.

- Building Permits for June rose to 1091K versus estimates of 965K and 978K in May.

- Initial Jobless Claims for this week rose to 366K versus estimates of 380K and 348K the prior week.

- Continuing Claims fell to 3122K versus estimates of 3180K and 3203K prior.

- Philly Fed for July fell to -16.3 versus estimates of -15.0 and -17.1 in June.

BOTTOM LINE: US housing starts unexpectedly surged the most in more than two years in June because of a change in NYC’s building code that overshadowed a slide in single-family home construction, Bloomberg said. Excluding a jump in construction of multifamily units in the Northeast, starts would have dropped 4%. Single-family home starts were the slowest in 17 years. Residential construction fell at a 24.6% pace in the first quarter and subtracted 1.1 percentage points from growth. Housing Starts will remain muted over the intermediate as homebuilders pare down inventories.

The number of Americans filing first-time claims for unemployment benefits rose last week, Bloomberg reported. The four-week moving average of claims fell to 376,500 from 381,000 the prior week. During the 2001 recession, which was one of the mildest on record, jobless claims averaged around 415,000. The unemployment rate among those eligible for benefits, which tracks the US This is still well below the long-term average of 2.9%. I expect the job market to continue to improve modestly through year-end. unemployment rate, fell to 2.3% from 2.4% the prior week.

Manufacturing in the Philly region improved slightly in July, Bloomberg reported. The New Orders component rose to -12.1 from -12.4 the prior month. The Prices Paid component rose to 75.6 versus 69.3 prior. The Prices Received component fell to 28.8 versus 29.7 in June. The Outlook component, for the next six months, fell to +18 versus +21.3 in June. I expect the Philly Fed to improve slightly again next month.

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