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Jobless Claims, Housing Starts, Philly: Stagnation Afoot?

Thursday, September 17, 2020

Early morning trading, following some negative reverberations in markets around the world, futures were lower. According to Zacks Strategist Jeremy Mullin this morning, this stems from Jay Powell giving a disappointing press conference yesterday. The Fed Chair reassured the market that low rates will continue for the next few years, but added nothing extra to the ante: Technical Support Threatened After Fed Disappoints

We also have a slew of new economic data this morning, and as we saw with Retail Sales a day ago, results here were somewhat disappointing. Thursday’s Initial Jobless Claims did come in lower than expected last week — 860K versus 870K expected, though previous week headline number went up from 884 originally reported to 893K in the revision. This basically continues the flat-lining of the U.S. labor market following a ramp-down from around 1.4 million claims per week back in July.

Continuing Claims follow suit, reporting a week in arrears: 12.63 million longer-term jobless claims was down from the prior week’s 13.54 million, but this earlier figure was revised notably upward from the 13.39 million reported a week ago. Again, we’re mostly seeing displacement of jobless claims from week to week, with the end result being an economy that is still struggling to put its citizens to work.

Housing Starts for August were reported today, as well, with disappointing results on its headline: 1.42 million seasonally adjusted, annualized units versus 1.52 million expected, and lower than the downwardly revised 1.49 million for July, down 5.1%. But looking underneath the hood, it’s not all bad news — single-family home starts last month, which is a much bigger progenitor of overall economic activity, rose 4.1%, +12% year over year. The miss on the Housing Starts headline all came from multi-family unit starts.

Building Permits, a forward indicator of future Starts, also came in light of expectations: 1.47 million represents a miss from the 1.55 million anticipated, and down from the 1.48 million reported for July, which itself was downwardly revised from 1.50 million initially reported, down 0.9%. Again, the bad news is all in the multi-family housing business; single-family new permits grew 6% month over month.

The Philly Fed Manufacturing Index reported a slight beat to 15, from a 13.0 estimate. This is the lowest total for the sixth-largest city in the U.S. in the past four months, when the rebound began from the 100 points lost combined in April and May. A positive number is a positive number, though, which is good; the issue seems to be, as with the labor market and overall housing, that stagnation may be taking hold going into the autumn.

Mark Vickery
Senior Editor

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