LIVE MARKETS-Thursday's data duet: New home sales, jobless claims

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THURSDAY'S DATA DUET: NEW HOME SALES, JOBLESS CLAIMS

Economic data on Thursday was good news for investors on the surface of things. An upside surprise in the housing market and jobless claims remain near their lowest levels since "Laugh In" was a hit.

The sales of freshly constructed single-family U.S. homes USHNS=ECI jumped by 6.4% in August to 684,000 units at a seasonally adjusted annualized rate (SAAR), according to the Commerce Department.

That's the biggest percentage gain since March, and 11.2% stronger than the 615,000 units SAAR analysts predicted.

The number marks a vigorous rebound from July's upwardly revised 4.3% loss, and stands in contrast with the 2% decline in sales of pre-owned homes in August, as reported by the National Association of Realtors earlier this month.

Regionally, a 36.1% decline in the northeast and a 15.2% drop in the west were offset by increases in the midwest and south, by 84.9% and 6.9%, respectively.

At August's pace, it would take 8.5 months to sell every new single-family home on the market, down from 9.0 months in July.

Still, the monthly jump looks like more of a blip than a trend to some analysts.

A decreasing population due to the immigration crackdown, a 30-year fixed mortgage rate that has hovered north of 6% for four years, and record home prices have been headwinds for the sector, putting home ownership beyond the realm of affordability, particularly for would-be first-time buyers.

"The drop in the current sales index of the NAHB survey to a 12-month low in September suggests the risks are skewed towards a renewed relapse in sales over coming months in response to worsening affordability," says Samuel Tombs, chief US economist at Pantheon Macroeconomics.

Last week, 197,000 U.S. workers joined the queue outside the unemployment office USJOB=ECI, just a hair fewer than the previous week and 4,000 south of consensus.

Ironing out weekly volatility, the four-week moving average of initial claims continues to drift sideways.

This weekly indicator has been bouncing around near multi-decade lows for months, and while it continues to suggest US firms are stuck in low-hire/low-fire mode, it provides the Fed no reason to doubt that the employment side of its dual mandate is healthy enough to withstand policy tightening aimed at reining in inflation.

"The labor market remains solid by most accounts, and we expect unemployment to stay low," writes Oren Klachkin, financial market economist at Nationwide. "With GDP and employment growth seemingly resilient, an emerging risk we’re watching for is stronger wage gains adding to the Fed’s inflation headache."

"Amid hawkish Fedspeak post-FOMC and given the inflation backdrop, we now expect hikes in October and December," Klachkin adds.

Ongoing jobless claims USJOBN=ECI, which are reported on a one-week lag, essentially stayed put at 1.719 million, marking a negligible 0.1% gain from the prior period and landing 26,000 shy of estimates.

The metric has settled, at long last, to a level associated with the pre-pandemic "normal," and helps explain the recent uptick in jobs confidence, as reported by the Conference Board.

(Stephen Culp)

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