I’ll be honest.. It’s Thanksgiving week and all I really want to think about are sweet potatoes and whether my Lions can beat the Vikings to take sole possession of first place in the NFC North. That being said, there’s actually a lot going on this week and quite a bit that happened last week in the market. Let’s feast on some economic data.
Retail Sales: Retail sales were up 0.8% in October. This figure held true even when car sales were taken out. Higher gas prices did help the number. When fuel was removed from the equation, sales were up just 0.6% by comparison. In addition, September data was revised 0.4% to 1.0%. Sales of cars were up 1.1% as were building materials and garden equipment. Non-store retailers saw sales growth of 1.5% as e-commerce sites start to see a holiday boost.
MBA Mortgage Applications: Rates are starting to move up pretty quickly, despite still being very low. The average rate for a 30-year fixed mortgage was up 18 basis points to 3.95%. Possibly due to the increase in rates, purchase applications were down 6.0% and refinance apps dropped 11.0% for a 9.2% decrease in application volume since last week.
Producer Price Index (PPI): Producer prices were flat in October. They’re up 0.8% for the year. Wholesale food prices were down 0.8%, but this was more than offset by rising gas prices. Taking out food and energy, prices would’ve been down 0.2% and up 1.2% on the year. When trade services were further removed, prices were down 0.1%, but up 1.6% on the year. A lot of other categories were down, but the price of gas was up 9.7%.
Industrial Production: Despite manufacturing being up 0.2%, overall production didn’t move an inch in October. Factory capacity utilization went down 0.1% to 75.3%. A big reason the number wasn’t higher were downturns in utility and mining production in September. Utility production was down 2.6% in September with mining down 0.4%. That may be temporary. The temperatures were brisk in Detroit this morning and as we hit mid-November, it may be time to kick on the heat. Vehicle production was up 0.9% and 5.0% on the year. High-tech production is up 1.0% in October and 6.7% on the year. Business equipment was up 0.2%.
Housing Market Index: This number came in flat, meeting expectations. Current sales and future sales both came in at 69. This was offset somewhat by a lack of foot traffic in new homes. This number is still contracting at 47. The market is still strongest in the West, where homebuilder sentiment is at 76. The South, the largest market for new housing, is at 65. The Midwest comes in at 59 and the Northeast, an area that’s already very built-up, is at 47.
Consumer Price Index (CPI): Energy led the way in terms of pushing this index higher with gasoline being up 7.0%. There was also a 0.4% increase in housing costs. The overall index was up 0.4% in October and 1.6% on the year. However, when food and energy are removed, inflation is up only 0.1% and 2.1% annually. As opposed to producer prices, on the consumer side, food costs appear to be unchanged, as was the cost of medical care. Education costs were up 0.5%, as were apparel and tobacco costs. Communication costs are down 0.5% and airfares fell 2.2%.
Housing Starts: Starts were up 25.5% in October. This puts the annualized rate at 1.323 million. This is the strongest monthly gain since August 2007. There was a 10.7% rise in the number of single-family homes, which is up to 869,000. Meanwhile, multifamily starts were up 69% to 454,000. Permits were up 0.3% to 1.229 million. A 2.7% increase in single-family permits offset a 3.3% the multifamily category.
Jobless Claims: Initial claims were down 19,000 to 235,000. The four-week average was down 6,250 to 253,500. Continuing claims are down 66,000 to 1.977 million. The four-week average was down 19,250 to 2.023 million.
We talked a bit last week about how the Freddie Mac data didn’t yet reflect the results of the election. This week, it made it into the report and the average 30-year fixed mortgage rate jumped up almost 40 basis points. They still remain very low and it’s a great time to lock in before they rise further.
30-year fixed-rate mortgages (FRMs) averaged 3.94% with an average 0.5 point for the week ending November 17, 2016, up from last week when they averaged 3.57%. A year ago at this time, 30-year FRMs averaged 3.97%.
15-year FRMs this week averaged 3.14% with an average 0.5 point, up from last week when they averaged 2.88%. A year ago at this time, 15-year FRMs averaged 3.18%.
5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 3.07% this week with an average 0.4 point, up from last week when they averaged 2.88%. A year ago, 5-year ARMs averaged 2.98%.
The stock market was down a little on Friday as health care stocks fell quite a bit. The markets were also busy digesting Federal Reserve data.
The Dow Jones industrial average was down 35.89 points to come in at 18,867.93. Despite this, it was up 0.11% for the week. The S&P 500 was up 0.81% for the week despite being down 5.22 points on the day to close at 2,181.90. Finally, the NASDAQ was down 12.46 points Friday, finishing at 5,321.51. It had a really good week though, up 1.61%.
The Week Ahead
Tuesday, November 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 resales) account for a larger share of the market than new homes and indicate housing market trends.
Wednesday, November 23
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.
Durable Goods Orders (8:30 a.m. ET) – Durable Goods Orders are based on new orders placed with domestic manufacturers for factory hard goods.
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.
FHFA House Price Index (9:00 a.m. ET) – The Federal Housing Finance Agency (FHFA) House Price Index (HPI) covers single-family housing using data provided by Fannie Mae and Freddie Mac. The HPI is derived from transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac.
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.
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.
International Trade in Goods (8:30 a.m. ET) – The Census Bureau’s Bureau of Economic Analysis has begun breaking out the goods from the remaining international trade numbers to get an idea of import and export estimates for GDP calculations.
They crammed a lot of important data in this week around the Thanksgiving holiday. We’ll have it all for you Monday while you do your online shopping and emerge from your food coma. If economic data isn’t enough to rouse you from your post-holiday stupor, we have plenty of home, money and life content ready to be delivered to your inbox twice a week if you subscribe to the Zing Blog below.
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