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Last Week’s Economic News In Review – June 1st, 2016

Market-Update-E Jansen

 

New home sales rallied to hit an eight-year high, while layoffs enjoyed continued declines, and orders for durable goods surged past market expectations.

New Home Sales

Sales of new single-family homes jumped a solid 16.6 percent in April to hit an annual rate of 619,000, according to last week’s report from the Census Bureau and the Department of Housing and Urban Development. April’s new home sales not only beat market expectations of a 521,000 annual rate, but marked the highest pace in eight years. Compared to last year, last month’s performance was 23.8 percent higher than April 2015’s rate off 500,000.

“The fundamentals for new home sales are good, and getting better: more jobs, rising wages, more household formations, and very low mortgage rates,” PNC Financial Services Deputy Chief Economist Gus Faucher told the Wall Street Journal.

Looking at affordability and availability of new homes, the median sales price of new houses sold in April 2016 hit $321,100, and the average sales price came in at $379,800. In terms of supply, the inventory of new homes for sale at the end of April totaled 243,000, representing a 4.7-month supply of at April’s sales rate.

Initial Jobless Claims

Layoffs fell for the second straight week, with first-time claims for unemployment benefits filed during the week ending May 21 falling to 268,000, a drop of 10,000 from the preceding week’s total of 278,000, the Employment and Training Administration reported last week.

This marked the 64th straight week that jobless claims were below the 300,000-claim mark that economists consider an indicator of a growing job market. The country hasn’t seen that long a streak in low layoffs since the 1970s.

The four-week moving average — usually considered a more stable measure of layoffs — actually grew a bit to hit 278,500 claims, which marked an increase of 2,750 claims over the prior week’s unrevised average of 275,750.

Durable Goods Orders

New orders for manufactured durable goods increased 3.4 percent in April to hit $235.9 billion, which was well past the 0.6 percent increase the market had expected, according to figures released last week by the Census Bureau. Orders for transportation equipment were a key driver for April’s gain, enjoying an 8.9 percent increase to reach $87.1 billion.

Durable goods orders represent an important indicator, because they can signal an anticipated increase in the manufacturing sector. April’s performance was part of an upward trend, as the month’s increase in orders followed a 1.9 percent increase in March.

This week we can expect:

  • Tuesday — Personal incomes and spending for April from the Bureau of Economic Analysis; May consumer confidence from The Conference Board.
  • Wednesday — April construction spending from the Census Bureau; May car and truck sales from the auto manufacturers.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration.
  • Friday — April factory orders from the Census Bureau; April trade balance from the Bureau of Economic Analysis and the Census Bureau; May unemployment, payrolls, hourly earnings and average workweek from the Bureau of Labor Statistics.