In October, the Philadelphia Fed index posted an impressive rebound. The headline index rose from -17.5 to 8.7, back in positive territory, while only a slight improvement was expected. The improvement is confirmed by the details as new orders (7.8 from -11.3), shipments (13.6 from -22.8), unfilled orders (3.4 from -10.4) and average workweek (3.1 from -13.7) showed strong gains and also delivery time increased somewhat (from -7.0 to -0.5). Inventories (-7.7 from 10.2) and number of employees (1.4 from 5.8) weakened somewhat in October. Price pressures eased, as prices paid (20.0 from 23.2) and prices received (-2.5 from 0.9) weakened slightly in October. After a sharp decline in August, the Philadelphia Fed index has reversed its losses and is now again close to the longer term average. Although uncertainty remains high, there are increasing signs that the US economy might avoid a new recession.
In the week ended the 15th of October, US initial jobless claims dropped slightly, from an upwardly revised 409 000 to 403 000. The consensus was looking for a marginally lower figure (400 000). The week under review included the Columbus Day Holiday, but the impact of it seems limited. The less volatile four week moving average, dropped lower too, from 409 250 to 403 000, the lowest level since April 16. Continuing claims, which are reported with an extra week lag, rose by 25 000, from an upwardly revised 3 694 000 to 3 719 000, above the estimated 3 690 000. The claims continue to hover around the 400 000 level, which is not too bad especially as the economic climate remains weak and uncertainty is very high.
US existing home sales came out exactly in line with expectations in September. Existing home sales dropped by 3% M/M to a total level of 4.91 million after an 8.4% M/M increase in August. The details show that weakness was based in single family sales (-3.6% M/M), while sales of existing condo’s rose by 1.8% M/M. The breakdown by region shows that sales fell in the West (-7.9% M/M), South (-3.4% M/M) and Midwest (-1.0% M/M), while they stabilized in the Northeast. The number of existing homes available for sale dropped from 3.064 million to 2.967 million, while months supply stabilized at 8.2. Both median and average prices dropped in September. The NAR said that distressed properties accounted for 30% of all sales and added that benchmark revisions are likely to show a measurable downward change. The US housing market remains depressed with still a big inventory of distressed properties to be worked off and banks are still tightening of credit standards, which complicates the recovery process.