Economic news released Thursday was consistent with an economy struggling to recover.
Thursday’s economic indicators came in “rather mixed,” said Ed Moya, senior market analyst at
“Jobless claims improved but show recovery is stalling,” he said.
Initial jobless claims slipped to a seasonally adjusted 860,000 in the week ended Sept. 12, from the previous week’s upwardly revised level of 893,000, originally reported as 884,000, the Labor Department said Thursday.
Economists polled by IFR Markets projected 850,000 claims in the week.
“Weekly jobless claims improved slightly, but the total number of people claiming some benefits in all programs rose to 29.8 million, with 659,000 using the Pandemic Unemployment Assistance program,” Moya said. “Continuing claims have now recovered half of the job losses throughout COVID-19, but still have a long way to go.”
Continuing claims dropped to 12.628 million in the week ended Sept. 5, from an upwardly revised level of 13.544 million a week earlier, first reported as 13.385 million.
"As time during the pandemic seems to both race ahead and stand still, new jobless claims have remained historically elevated for 26 weeks, or a half-year,” said Mark Hamrick, senior economic analyst at Bankrate.
The states with the largest rise in claims in the week ended Sept. 5 were: California (23,841), Texas (8,618), Louisiana (8,375), New Jersey (2,402), and Washington (2,173), while the states with the biggest drops were: Kentucky (7,219), Florida (5,334), Pennsylvania (2,257), Kansas (1,915), and Michigan (994).
Housing starts
Housing starts declined 5.1% in August, while building permits slid 0.9% in the month, according to the Commerce Department.
Starts fell to a seasonally adjusted 1.416 million annual rate from a revised July pace of 1.492 million, first reported as 1.496 million. Year-over-year starts are up 2.8% from the 1.377 million pace in August 2019.
Permits decreased to a seasonally adjusted 1.470 million annual rate from July’s unrevised 1.483 million pace, and are 0.1% under the August 2019 level of 1.471 million.
Economists expected 1.470 million starts and 1.510 million permits in the month.
“The risks to the housing market are to the downside; however, this sector is still a bright spot to potentially drive the economy out of recession,” said Yelena Maleyev, economist at Grant Thornton. “Builders are still on track to construct more single-family homes than a year ago but increasing headwinds from higher costs, slowing demand and the lack of new federal aid could drag on activity as we enter the new year, especially as more furloughs become permanent job losses.”
“Seasonal factors” will start to weigh on housing data, and could “derail optimism” about the market, Moya said, despite low mortgage rates and high demand for homes in the suburbs.
“Hurricane season also weighed on the housing starts,” he added. “The strong housing market will remain one of the only positive outcomes of the coronavirus pandemic.
Philadelphia Fed manufacturing
The manufacturing sector in the Philadelphia region “continued to expand” in September, but at a slower pace than in August, according to the Federal Reserve Bank of Philadelphia's Manufacturing Business Outlook Survey, released Thursday.
The general activity index dropped to 15.0 in September from 17.2 in August.
Economists expected a 15.5 read.
“The Philadelphia business outlook fell, as expected, but still suggests the recovery continues, as current activity, new orders, shipments, and employment all remained positive,” said Moya. “The economic data appears poised to decelerate further and that should foster calls for further accommodation. The pace of improvement is only going to get worse as Congress fails to deliver further fiscal stimulus.”
The new orders index rose to 25.0 from August’s 19.0 level. Shipments increased to 36.6 from 9.4, while unfilled orders reversed to positive 0.4 from negative 0.6.
Delivery times climbed to 12.2 from 7.3, while inventories widened to negative 10.8 from negative 1.9.
Prices paid jumped to 25.1 from 15.3 and prices received gained to 18.4 from 12.4.
The number of full-time employees rose to 15.7 from 9.0, while the average employee workweek dropped to 7.8 from 11.3.
Most of the future indexes gained, suggesting “more widespread optimism among firms about growth over the next six months."
The future general business activity index for the region jumped to 56.6 from 38.8.
