Industrial Production – November industrial production was up 1.3%. This beat an estimated 0.7% gain. Manufacturing gained 1.1%, putting factory output well above the 0.3% average it’s seen in the last five months. Mining was down 0.1% following October’s 1.0% decline. Both durable and nondurable goods gained over a full percentage point and saw increases across every major category.
Housing Market Index – The index readings for December showed that builder confidence is holding firm with a reading of 57. The reading is strengthened by strong numbers for expectations of future sales at 65. The one-point drop of the composite from last month’s 58 is due in large part to a low number of buyers coming through new homes, leaving the score for the traffic component at 45. This is blamed on a shortage of first-time home buyers in the market.
Housing Starts – Housing starts were down 1.6% in November after rebounding in October. The 1.028 million starts were 1.0% below projections and 7.0% below this time last year. Multi-family starts were up 6.7% following a 9.9% drop in October. Single-family starts were down 5.4% following October gains. Permits were down 5.2%.
MBA Purchase Applications – Applications were down 3.3% this week despite falling mortgage rates. The purchase index declined 7% while refinances were flat for the week. There was a 16.0% increase in government-backed refinances, however.
Consumer Price Index (CPI) – Inflation fell .3% in November due to steep drops in gas prices, which are down 6.6%. Other falling indexes include apparel, used and new vehicles, household furnishings and operations, as well as personal care products. Meanwhile, the price of food rose .2%. Other increases include medical care, airline fares and alcoholic beverages. At this time last year, inflation rose 0.4%.
Jobless Claims – Initial claims fell by 6,000 to 289,000 last week. The four-week average is down 750 jobs. Continuing claims were down 147,000 in the week of December 6, bringing them down to 2.373 million. The four-week average of continuing claims is at 2.397 million, still 30,000 above where it was a month ago at this time.
Mortgage rates were down across the board this week after 10-year Treasury notes dropped to their lowest levels since May 2013.
30-year fixed-rate mortgages (FRMs) averaged 3.80% with an average 0.6 point for the week ending December 18, 2014, down from last week when they averaged 3.93%. A year ago at this time, 30-year FRMs averaged 4.47%.
15-year FRMs this week averaged 3.09% with an average 0.6 point, down from last week when they averaged 3.20%. A year ago at this time, 15-year FRMs averaged 3.52%.
5-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 2.95% this week with an average 0.5 point, down from last week when they averaged 2.98%. A year ago, 5-year ARMs averaged 3.00%.
1-year Treasury-indexed ARMs averaged 2.38% this week with an average 0.4 point, down from last week when they averaged 2.40%. At this time last year, the 1-year ARMs averaged 2.56%.
The S&P 500 posted its biggest weekly gain in almost two years, finishing Friday at 2,070.65 – up 3.4% from last week’s close. The Dow Jones Industrial Average closed at 17,804.80, a weekly 3% gain. The NASDAQ was up 16.98 points on Friday to close the week at 4,765.38 – up 1.0%.
The Week Ahead
Monday, December 22
Existing Home Sales (10:00 a.m. ET) – Existing Home Sales tallies the number of previously constructed homes, condominiums and co-ops in which a sale closed during the month. Existing homes (also known as home re-sales) account for a larger share of the market than new homes and indicate housing market trends.
Tuesday, December 23
Durable Goods Orders (8:30 a.m. ET) – Durable goods orders are based on the new orders placed with domestic manufacturers for factory hard goods.
GDP (8:30 a.m. ET) – This measures the monetary value of all final goods and services produced within the U.S. This report is released on a quarterly basis.
Consumer Sentiment (9:55 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.
New Home Sales (10:00 a.m. ET) – New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances.
Wednesday, December 24
MBA Purchase Applications (7:00 a.m. ET) – The purchase applications index measures applications at mortgage lenders. This is a leading indicator for single-family home sales and housing construction.
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. An increasing trend suggests a deteriorating labor market. The four-week moving average of new claims levels out weekly volatility.
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