News & Events

Economic Advisor: November 22, 2017
November 22, 2017


 

New home construction rallied, while layoffs increased, and industrial production grew beyond expectations.

Housing Starts

Starts on construction of new homes rebounded to hit a one-year high, with housing starts growing to an annual rate of 1.29 million, which represented a whopping 13.7 percent gain over September’s pace of 1.13 million, according to last week’s report from the Census Bureau.

While that figure might be 2.9 percent down from the same period a year ago, when October 2016’s rate was 1.32 million, it was still good news for real estate watchers desperate to see some new inventory arrive in hopes that it might temper prices and drive up volume.

“Homebuilders are building and that signals greater confidence in the economy ahead,” MUFG Chief Economist Chris Rupkey told the Reuters news service. “Housing construction has been the missing link in the puzzle over why investment spending has lagged in this recovery.”

Starts on single-family homes also saw solid growth in October, growing to a rate of 877,000, which was 5.3 percent higher than September’s pace of 833,000.

Permits issued for the construction of housing in October grew by 5.9 percent to hit an annual rate of 1.29 million. Permits issued for single-family home construction notched up 1.9 percent to hit an annual rate of 839,000.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending November 11, grew to 249,000, a gain of 10,000 claims from the prior week’s total of 239,000, according to last week’s report from the Employment and Training Administration. This was well over market expectations of 235,000 claims.

The four-week moving average, which is considered a more stable measure of jobless claims notched up to 237,750, an increase of 6,500 claims from the preceding week’s average of 231,250 claims.

This latest report marked the 141st straight week that initial claims have come in below the 300,000-claim level, which economists consider an indicator of a growing job market.

“The data continue to signal enough strength in employment growth to keep the unemployment rate trending down,” High Frequency Economics’ Chief U.S. Economist Jim O’Sullivan told the New York Times.

Industrial Production

Industrial production, which measures all output from manufacturing, mining and utilities, grew 0.9 percent in October, expanding well past market expectations of 0.6 percent growth, according to last week’s report from the Federal Reserve.

The big drivers of that growth were manufacturing, which increased its output by 1.3 percent, and utilities, which grew 2 percent. All told, industrial production has increased 2.9 percent over the past 12 months.

This week, we can expect:

  • Monday — Leading economic indicators for October from The Conference Board.
  • Tuesday — Existing home sales for October from the National Association of Realtors.
  • Wednesday — Initial jobless claims for last week from the Employment and Training Administration; durable goods orders for October from the Census Bureau; consumer sentiment for November from the University of Michigan Surveys of Consumers.

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