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It’s been a strange year. In a lot of ways, it just feels like you’re trying to hang on and get through it. I’m off next week and for the rest of the year, so if I can just get through this, it’s going to be a nice break.

The economy is the same way. It’s been brutal, but there’s relief on the way in the form of a vaccine. We just have to hold on a little longer.

Headline News

As always, this report was compiled based on analysis from Econoday.1 Let’s roll through it!

Retail Sales

Retail sales were up 0.3% in the month of October. This was up 0.2% when vehicles were taken out, and that number was matched when further excluding gas. Finally, when looking at a control group, sales were up 0.2%.

Getting into the different categories, vehicle sales were up 0.4%, while non-store retailers, led by e-commerce, were up 3.1%. On the year, sales in these two categories are up 10.7% and 29.1%. Also strong were building materials, which had sales up 0.9% and 19.5% on the year.

On the downside, restaurant sales are down 14.2% on the year after falling 0.1% in October. With shutdowns of high-traffic businesses (including restaurants) happening in various areas across the country, these numbers aren’t likely to look better in November and December. Meanwhile, clothing sales are down 4.2% monthly and 12.6% since last October.

Industrial Production

Industrial production was up 1.1% in October. Meanwhile, manufacturing was up 1% and utilization of space in factories was up 1.3% to 72.8%. Production materials were up 1%, which helped goose the numbers. Business equipment production was up 0.6% and consumer goods were up 0.8%. Vehicle production fell 0.1%. Total industrial production is down 5.3% on the year.

Meanwhile, aircraft production was up 2.1% for the month, but it’s fallen 17.8% since the same time a year ago. Mining also remains down 14.4% on the year. Utilities were up 3.9% on the month, but they’re also down 3% year-to-year.

Housing Market Index

The housing market in November was as hot as it’s ever been, up 5 points to come in at 90. Current sales came in at 96 with an 89 for sales expectations in the next 6 months. Meanwhile, traffic of prospective buyers going through homes also had a record-breaking month at 77.

We may be in the middle of an economic crisis, but housing has been strong and builders are feeling the momentum. There is incredible optimism being driven by low interest rates.

Housing Starts And Permits

Housing starts were up 4.9% in October to an annual rate of 1.53 million. This was much higher than expectations for 1.46 million starts and really good news as the one thing the market is struggling with is tight supply. Single-family permits were up 0.6% and have risen 20.6% on the year, so there’s even more help coming.

On the start side, single-family permits were up 6.4% and 29.4% since the same time a year ago, up 14% since February before COVID-19 hit.

It’s worth noting that permits held steady at 1.545 million overall, they were pulled down by a 1.6% decline in multifamily permits. Multifamily starts are also down 35% since February.

Existing Home Sales

Existing home sales in October were up 4.3% to 6.85 million on a seasonally adjusted annual basis. Sales overall are up 26.6% on the year. Breaking things down by category, condo sales were up 25.9% and single-family sales rose 26.7% year-to-year after gains of 5.8% and 4.1% on the month.

On a regional basis, the Northeast is the strongest region, up 27.9%, with the West in the back, still up 21.4% year-to-year.

Prices were up 0.5% from the month and 15.5% for the year. One potential limiting factor is the fact that supply is down to 2.5 months, which is extremely low.

Case-Shiller House Price Index

In September, the rolling 3-month average for home prices in the 20-city index was up 1.3% on a seasonally adjusted basis and 1.2% overall. The index is up 6.6% since last October. This takes into account all home sales in the regions looked at.

FHFA House Price Index

In this index for conventional loan-backed home purchases, prices were up 1.7% September and 9.1% on the year. In addition to being based solely on transactions backed by Fannie Mae and Freddie Mac, this isn’t a 3-month average like the Case-Shiller index above.

Consumer Confidence

Consumer confidence fell 5.3 points to 96.1 in November after being upwardly revised in October. Assessments of the present situation were down 0.3 points to 105.9, while consumers seem much more pessimistic about the outlook for the future in the November data as this component was down almost 9 full points to 89.5.

In a little bit of balancing, fewer people see current business conditions as being good while the same can be said for those who see bad business conditions. Moreover, assessments of the labor market remained steady.

However, over the next 6 months, people are less positive. Those who expect business conditions to be better was down from 36% to 27.4% with a 3.9% increase in those who expect conditions to worsen. There was also a dip in the number of people who expect more jobs to open up in the months ahead. There was also an increase in labor market pessimists who expect fewer jobs in the near future.

Durable Goods Orders

Durable goods orders were up 1.3% overall, a number that held even when transportation was taken out. When looking specifically at capital goods in core categories, these orders were up 0.7%. All beat consensus expectations for October.

Meanwhile, inventories were up 0.3% for the month, meaning manufacturers are expecting more orders in the future. That’s a good thing. However, unfilled orders were also down 0.3%. If factories are able to cut into their unfilled orders with their current workforce, they’re less incentivized to hire more people.

Gross Domestic Product (GDP)

GDP is up 33.1% in the second preliminary reading of the third quarter. This points to a strong bounce back after the economic shutdowns that impacted the spring and summer. Consumer spending was up 40.6%, down 0.1% from the last estimate. However, this alone contributes to 25.22% of GDP growth.

Business investment growth help GDP rise by 3.06% while growth in residential investment made up 2.17% of GDP. Meanwhile, decreases in government spending and exports pulled GDP down by a combined 3.94%. Still, there was more good news as inventories were up and contributed 6.55% to growth in the economy.

International Trade In Goods

The nation’s trade deficit in goods increased by $900 million to $80.3 billion in October. Exports were up 2.8%, but also increasing were imports, up 2.2%.

Starting with exports, there was a 6.1% increase in exports of consumer goods along with a 3.9% increase for industrial supplies as well as capital goods. Food exports were down 4.4% after rising 14.4% in the prior month on the strength of the sales of soybeans to China.

On the import end, there’s been a 3.2% uptick in vehicles. A good sign is increased capital goods imports, which means increased business investment. These are up 2.4%.

New Home Sales

New home sales were down slightly in October at 999,000. However, September numbers were revised up in a major way coming in at 1.002 million on a seasonally adjusted basis. That’s an incredible annual rate of expected growth. These numbers are up 39.5% since February.

Meanwhile, the price of new homes was up 0.1% to $330,600, having risen 2.5% on the year. Meanwhile, supply remains incredibly tight here as well, at 3.3 months relative to the current pace of sales.

Consumer Sentiment

In the final reading of November, consumer sentiment was down slightly at 76.9. This is down from 81.8 in the final reading of October. There were lower expectations for the future, but current conditions were viewed as slightly better.

Personal Income And Outlays

Personal incomes were down 0.7% and in a double whammy for consumers, expenses were up 0.5% in October. Meanwhile, prices were flat on the month and are only up 1.2% on the year and have risen 1.4% in core categories. Health care and hospital services pricing were both up as COVID-19 has started to make a comeback.

Pending Home Sales

The number of homes of the contract for sale was down 1.1% to 128.9. This isn’t a great sign for November because this tends to be a leading indicator.

ISM Manufacturing Index

In November, manufacturing side of the fall of 1.8 points in this index to 57.5. This means that while the manufacturing sector is still growing, it’s not doing so at the same pace.

New orders came in at 65.1 in November and backlogs were also up 1.2 points at 56.9. Orders from customers overseas were also up better than 2 points at 57.8. However, employment is falling in the sample at 48.4. It’s interesting because everything else in this report is going in the right direction. One possible factor may be shutdowns.

Employment Situation

The U.S. nonfarm payroll numbers came in up 245,000 in November. The unemployment rate ticked down from 6.9% to 6.7%. Meanwhile, 344,000 jobs were added to private payrolls. In one less-hopeful sign, the labor force participation rate went down to 61.5% in comparison to 61.7% in October.

Although 245,000 jobs were added, this was below a consensus estimate for an addition of 500,000 jobs. This may be an indication that the recovery is slowing. Digging into the numbers, there were 99,000 jobs that fell off government payrolls, mostly due to the wind down of the census. However, local jobs are also falling. There were also downturns for education as well as retail trade, which are normally brimming this time of year.

There were 31,000 jobs added in leisure and hospitality. Construction added 27,000 jobs, as did manufacturing.

The average hourly earnings for the month were up 0.3% and have risen 4.4% on the year. The average workweek held steady at 34 hours, 48 minutes.

International Trade

The overall trade deficits increased by $1 billion in October to come in at $63.1 billion. Exports were up 2.2% and imports rose 2.1%. The goods deficit was up $600 million to $81.4 billion. Meanwhile, the surplus in services was down $400 million to $18.3 billion.

Inflation

Price inflation on the consumer side was up 0.2% in November and 1.2% overall for the year. Meanwhile, after excluding food and energy, it was up 0.2% and 1.6% on the year. On the producer’s side, the numbers are even lower, up 0.1% overall for the month and 0.8% on the year.

This is well below on the 2% rate that the Federal Reserve thinks would be healthy to stimulate the economy by incentivizing purchasing now rather than waiting.

Mortgage Rates

Mortgage rates were flat last week, but they came in at 2.71% for a 30-year mortgage with 0.7 points paid. This is down from 3.73% last year. It’s hard to put into words how good rates are right now, but there’s never been a better time to get started with a mortgage if you’re ready.

The average interest rate on a 15-year fixed mortgage reported by Freddie Mac is also an astonishingly low 2.26%, which is down from 3.19% a year ago.

That’s all for now, folks! If you have questions, leave them for us in the comments below.

1 Important Legal Notice: Econoday has attempted to verify the information contained in this calendar. However, any aspect of such information may change without notice. Econoday does not provide investment advice, and does not represent or warrant that any of the information is accurate or complete at any time. Copyright 2020 Econoday, Inc. All rights reserved.

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