Hurricane Nate hit the Gulf Coast between Louisiana and Florida this weekend. If you’re in one of the affected areas, our thoughts are with you. We hope you’re OK and can soon get started with the rebuilding process. We’ve compiled some assistance resources for you.
This hurricane season has seen four major storms affect various parts of the continental U.S. along with hitting Puerto Rico fairly hard. Along with disrupting countless lives, the fallout is starting to really become evident when examining the economic data. This is likely to continue for the next several months.
ISM Manufacturing Index
Confidence in the manufacturing sector was up by 2.8 points to a level of 60.8 in September, the highest it’s been in 13 years. Delivery of orders has been slower, which actually translates to a stronger report on the presumption that more hiring is necessary. At the same time, part of the reason for the bigger backlog is the effect of the hurricanes. Input prices are also up to 71.5, rising 9.5 points after the storms.
New orders also rose 4.3 points to a four-year high of 64.6. Production came in high at 62.2. Employment was also at 60.3, the first time it’s been that high in more than six years.
MBA Mortgage Applications
Mortgage applications were down 0.4% overall as the 1.0% rise in purchase applications wasn’t enough to make up for the fact that refinance volume fell 2.0% last week. The average rate on a 30-year fixed-rate conforming mortgage rose one basis point to 4.12%. In addition to interest rates being slightly higher as measured by this index, analysts point to some hurricane effects, as applications have slowed in the South.
The U.S. trade deficit fell by $1.2 billion in August to come in at $42.4 billion. Exports were up 0.4% to $195.3 billion. There was a 0.4% rise in exports for goods. In last week’s breakout of the goods data, it was noted that the U.S. deficit in this area fell by 1.3% to $64.4 billion. Meanwhile, there was a 1.4% rise in the services surplus to $22.0 billion. Capital goods exports also increased.
On the import side, the petroleum deficits widened to $4.9 billion, up from $3.0 billion the month before. There was a $1 rise in the price per barrel of oil to $44.11.
Hurricane season is definitely having an impact on employment, as we’ll see below, but the impact of the storms on weekly unemployment claims seems to be lessening. Initial claims were down 12,000 to 260,000 last week. Claims in Texas, Florida and Georgia are all coming down. The four-week average fell 9,500 to 268,250.
In terms of continuing claims, these were up 2,000 to 1.930 million last week. On the other hand, the four-week average fell 3,250 to come in at 1.947 million.
The hurricanes had a definite impact on the September jobs report. The number of jobs available on nonfarm payrolls fell 33,000 in September. However, more people who want to be employed are working. The unemployment rate fell from 4.4% in August to 4.2% last month, the lowest level since January 2001. The number of jobs available on private payrolls fell by 40,000. Meanwhile, 1,000 jobs came off manufacturing payrolls. Helping lessen the blow were 7,000 jobs added to government payrolls. In addition, the labor force participation rate went up 0.2% to 63.1%.
Taking a look at a couple of numbers that matter to the workforce, wages were up 0.5% in September and have risen 2.9% on the year. The average workweek remained at 34 hours, 24 minutes.
One sector that appears to be hugely affected by the hurricanes is the restaurant business. There was a drop in employment of 104,700 in this industry. Nonfarm payrolls in August and July were revised lower by a combined 38,000 jobs.
Fixed rates were up last week, according to data from Freddie Mac. They still remain very low. If you’re in the market for a mortgage and you see a rate you like, don’t hesitate to lock the rate.
The average rate on a 30-year fixed mortgage last week was 3.85% with 0.5 points in fees. This was up two basis points on the week. Last year at this time, the average 30-year fixed-rate was 3.42%.
In shorter terms, the average 15-year fixed-rate was up two basis points to 3.15% with 0.5 points in upfront interest. At this time a year ago, the average rate was 2.72%.
Finally, the average rate on a 5-year treasury-indexed hybrid adjustable rate mortgage fell two basis points to 3.18% with 0.4 points. The average rate is up from 2.80% last year.
Markets were mixed Friday in reaction to a jobs number that would probably be considered subpar if it weren’t for the hurricanes. The S&P 500 and Dow Jones industrial average both had long-standing win streaks end. Meanwhile, the Nasdaq managed to close up, hitting another record high.
The Dow finished down 1.72 points Friday to close at 22,773.67, which was still up 1.65% on the week. The S&P 500 closed at 2,549.33 to end the week down 2.74 points, but up 1.19% over the last five days. The Nasdaq was up 1.45% for the week, finishing at 6,590.18. This was up 4.82 points on the day.
The Week Ahead
Monday, October 9
Today is Columbus Day, and certain markets and banks are closed.
Tuesday, October 10
Quicken Loans Home Price Perception Index (HPPI) (10:00 a.m. ET) – Quicken Loans, the nation’s second-largest retail mortgage lender, releases data every month comparing what people think their homes are worth to appraisals. Similar opinions of value often make for smoother purchase and refinance transactions.
Quicken Loans Home Value Index (HVI) (10:00 a.m. ET) – Quicken Loans also releases data on home values, on both the national and regional levels. Homeowners can gain a perception of whether values are increasing or decreasing and get a better idea of where they stand in terms of equity.
Wednesday, October 11
MBA Mortgage Applications (7:00 a.m. ET) – The mortgage applications index measures applications to mortgage lenders. This is a leading indicator for single-family home sales and housing construction.
Thursday, October 12
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals filing for unemployment insurance for the first time. An increasing trend suggests a deteriorating labor market. The four-week moving average of new claims smooths out weekly volatility.
Producer Price Index (PPI) (8:30 a.m. ET) – The Producer Price Index measures the average change over time in prices received by domestic producers for the sale of goods and services.
Friday, October 13
Consumer Price Index (CPI) (8:30 a.m. ET) – The consumer price index measures changes based on the price of a fixed basket of goods and services purchased by consumers.
Retail Sales (8:30 a.m. ET) – Retail sales measure total receipts from stores selling merchandise and related services to final consumers. Sales are measured by retail and food service stores. Data is collected from the Monthly Retail Trade Survey conducted by the U.S. Census Bureau.
Consumer Sentiment (10:00 a.m. ET) – The University of Michigan’s Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment is directly related to the strength of consumer spending.
We get lots of housing and inflation data next week. We’ll have it all covered in Market Update.
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This week, we thought we would continue our recent Halloween theme and talk about how to spook up your home decor. Share your favorite Halloween trick with us in the comments. Have a great week!
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