Unemployment claims reverse most of previous weekís drop. In the week ended the 14th of July, US initial jobless claims edged up again. Initial claims rose by 34 000, from an upwardly revised 352,000 to 386,000, while an increase to 365,000 was forecast. In the previous week, initial jobless claims dropped sharply, to its lowest level since early 2008. The Labor Department added that claims are experiencing volatility due to differences in timing of auto layoffs that normally occur during this time of the year. As the figures are distorted by seasonal adjustment factors, we shouldnít draw strong conclusions from it. The less volatile four-week moving average dropped from 377,000 to 375,500. Continuing claims, which are reported with an extra week lag, surprised on the upside of expectations, rising from 3,313,000 to 3,134,000, while the consensus was looking for a decline to 3,300,000.
For the first time in four months, the Philadelphia Fed index increased in July. The headline index rose from -16.6 to -12.9 after falling sharply in the previous two months. The rebound was somewhat disappointing, as the consensus was looking for a stronger recovery, to -8.0. The details show a pick-up in new orders (-6.9 from -18.8), shipments (-8.6 from -16.6) and unfilled orders (-9.5 from -16.3), while number of employees worsened significantly (from 1.8 to -8.4).
Delivery time (-15.7 from -15.5), inventories (-7.5 from -8.7) and average workweek (-17.3 from -19.1), stayed broadly unchanged from the previous month but remain in severe contraction. Prices paid increased from -2.8 to 3.7 and prices received rose from -6.9 to 1.6. The forward looking index (six months from now) remained broadly unchanged from the previous month at 19.3 (from 19.5).
The Philly Fed index shows some improvement from the previous month, both in the headline figure and the details, but the index remains in serious contraction, raising expectations that last month’s sharp decline in the manufacturing ISM was no outlier. After a strong start of the year manufacturing activity is seriously slowing and might even be stalling.
In June, US existing home sales fell unexpectedly. Existing home sales dropped by 5.4% M/M to a total level of 4.37 million, while the previous figure was upwardly revised from 4.55M to 4.62M. The details show that weakness was broad-based as sales of both single family (-5.1% M/M) existing homes and existing condoís (-7.8% M/M) dropped in June. Regional data show that weakness was also wide-spread across the regions. The number of existing homes for sale fell from 2.470 million to 2.390 million, while monthsí supply picked up from 6.4 to 6.6. Price data show a pick-up in both median and average prices. Existing home sales fell to the lowest level in eight months due to tight supplies of affordable homes, which is limited first-timing buying. In the next months, US existing home sales will continue to suffer from falling inventories.