Today’s economic news has been mixed. Durable goods orders were weak this highlights the current weakness in exports. New home sales came in very strong, highlighting the strength of the domestic economy. Also very low levels of jobless claims are highlighting the best argument that the FOMC hawks have, that the available labour supply is tight and getting tighter.
-Durable goods orders
Transportation equipment, particularly aircraft orders, once again have played a huge role in durable goods orders which fell 2.0 percent in August as expected. Excluding transportation, durable goods were unchanged which was still lower than expected.
Looking at transportation equipment, both aircraft and motor vehicles were weak. Orders for civilian aircraft fell 12 percent in the month while vehicle orders fell 1.5 percent. Vehicle shipments were down 1.6 percent but follow July’s big 4.7 percent surge.
This report falls in line with last week’s industrial production data where manufacturing held flat in August. Weakness in exports is the one factor tipping the factory sector away from growth.
-New Home Sales
New home sales can be very volatile month-to-month as they are in the August report where, at 552,000, the annual rate came in far above the high-end estimate. This is the highest rate since February 2008
Volatility aside, this report is impressively strong and likely marks an upturn for housing data which, like Monday’s existing home sales report, had been showing limited and uneven strength.
Initial jobless claims continue to hold at near record lows, a lower than expected 267,000 in the September 19 week. The 4-week average is down slightly to 271,750. There are no special factors affecting the report, one that points to tight conditions in labour market
At 2.242 million, continuing claims are down nearly 25,000 from the August week prior with the 4-week average, now at 2.252 million, down nearly 15,000. The unemployment rate for insured employees is unchanged at a very low 1.7 percent.