LIVE MARKETS-Thursday data buffet: Home sales, jobless claims, et al

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THURSDAY DATA BUFFET: HOME SALES, JOBLESS CLAIMS, ET AL

Investors were treated to a four-course data meal on Thursday, which generally sated the hunger for news of economic strength, while leaving just enough room for dessert in the form of rate cuts from the Federal Reserve.

The sales of pre-owned U.S. homes USEHS=ECI increased by 3.4% last month to 3.96 million units at a seasonally adjusted annualized rate (SAAR), according to the National Association of Realtors $(NAR.UK)$.

The number landed 0.8% above the 3.93 million units SAAR analysts expected.

The increase was largely driven by a 3.5% increase in single-family homes, a robust bounce-back from September's 0.9% decline.

As a result of this selling spurt, even as the actual number of homes on the market edges higher, the months supply (or, the number of months it would take to sell every home on the market at October's pace).

"The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions,” says Lawrence Yun, NAR's chief economist. "However, for most first-time homebuyers, mortgage financing is critically important."

"While mortgage rates remain elevated, they are expected to stabilize," Yun adds.

Pivoting to the labor market, 213,000 U.S. workers joined the queue outside the unemployment office USJOB=ECI last week, 2.7% fewer than the week prior and 7,000 shy of consensus.

It was the smallest number of initial claims since May.

"After being boosted by the Boeing strike and Hurricanes Helene and Milton, claims have returned to a level consistent with limited layoffs," writes Nancy Vanden Houten, lead U.S. economist at Oxford Economics.

While shorter unemployment lines would normally be cause for cheer, the persistently tight labor market could translate to slower and fewer policy rate cuts from the Federal Reserve.

The underlying trend, as expressed by the four-week moving average of initial jobless claims, remains on a gradual decline.

On the other hand, ongoing claims USJOBN=ECI, reported on a one-week lag, jumped by 1.9% to 1.908 million, the highest level in almost exactly three years.

"The weak level of hiring indicators suggests that fewer people who are laid off will find new work quickly," says Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. "This deterioration appears to be independent of political uncertainty, as job postings have continued to fall since the election."

"The further rise in continuing claims last week, to the highest level in almost three years, adds to evidence that job seekers are finding it increasingly difficult to find a new position," Tombs adds.

Indeed, that notion is reflected in the gradual softening of jobs confidence data from the Conference Board:

Next, factory in the Atlantic region unexpectedly contracted in November.

The Philadelphia Federal Reserve's Business index, better-known as the Philly Fed USPFDB=ECI plunged to -5.5 from last month's 10.3 reading.

That is the photo negative of last week's Empire State index, which surged from negative (contractive) territory to 31.2, its highest reading since December 2021.

The wide disparity between the Philly Fed/Empire State indexes this month serves to underscore how volatile these metrics can be.

"The big picture remains that manufacturing is struggling amid weak external demand and still tight credit conditions, which are weighing on investment plans," Tombs said. "The incoming Trump administration’s plans for extensive new tariffs present an additional near-term challenge for the sector."

Finally, the Conference Board's Leading Economic index $(LEI)$ USLEAD, an amalgamation of 10 forward-looking economic metrics (including initial jobless claims, ISM new orders, building permits, Treasury yield spreads and S&P 500 price performance, among others), dipped by 0.4% in October.

The number marked an acceleration over September's decline and a disappointment versus analyst expectations, both of which were showed a 0.3% decline.

"The outcome of the US election doesn't alter our outlook the economy appreciably next year," writes Matthew Martin, senior U.S economist at Oxford Economics. "Strong consumer spending, lower interest rates, and fiscal support will keep the economy in expansion."

(Stephen Culp)

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