{"id":314,"date":"2014-09-18T11:59:35","date_gmt":"2014-09-18T15:59:35","guid":{"rendered":"http:\/\/naroffeconomics.com\/?p=314"},"modified":"2014-09-23T10:42:39","modified_gmt":"2014-09-23T14:42:39","slug":"august-housing-starts-and-permits-and-jobless-claims","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=314","title":{"rendered":"August Housing Starts and Permits and Jobless Claims"},"content":{"rendered":"

KEY DATA:<\/strong> Starts: -14.4%; 1-Family: -2.4%; Permits: -5.4%; 1-Family: -0.8%\/Claims: 280,000 (down 36,000)<\/p>\n

IN A NUTSHELL:<\/strong> \u00c2\u00a0\u00c2\u00a0\u00e2\u20ac\u0153Home construction keeps bouncing around but with builder confidence soaring, it is likely the August slump will be followed by a September surge.\u00e2\u20ac\u009d<\/em><\/strong><\/p>\n

WHAT IT MEANS:<\/strong> \u00c2\u00a0Housing starts cratered in August<\/em><\/strong> but the Alfred E. Neuman in me holds strong: I am not worried.\u00c2\u00a0 July\u00e2\u20ac\u2122s level was revised up to the highest rate in nearly seven years.\u00c2\u00a0 A 31.5% decline in buildings of five units or more was the major reason for the August drop and this component is extremely volatile. <\/em><\/strong>\u00c2\u00a0For the first eight months of the year, starts are up by nearly nine percent, keeping up hopes that we could see another double-digit rise in construction activity.\u00c2\u00a0 I think that is likely for two reasons.\u00c2\u00a0 First, permits are still running above starts.<\/em><\/strong>\u00c2\u00a0 That points to an acceleration in construction.\u00c2\u00a0 Second, the National Association of Home Builders\/Wells Fargo Housing Market Index surged in August to its highest level since November 2005.\u00c2\u00a0 Builders can get irrationally exuberant at times, but that is usually when construction activity is surging.<\/em><\/strong>\u00c2\u00a0 So look for a rebound when the September numbers come out.<\/p>\n

With the Fed still focusing on labor, the sharp drop in the weekly jobless claims number was eye opening.\u00c2\u00a0 We are about as low as can be expected. <\/em><\/strong>\u00c2\u00a0Don\u00e2\u20ac\u2122t be surprised if this number soars soon.\u00c2\u00a0 The closing of three casinos in Atlantic City will likely mess up the data for a short time.\u00c2\u00a0 \u00c2\u00a0Also, the Philadelphia Fed\u00e2\u20ac\u2122s Business Outlook Survey showed that activity grew at a somewhat slower pace in September.\u00c2\u00a0 \u00c2\u00a0Nevertheless, orders were strong, backlogs grew and hiring jumped.\u00c2\u00a0 Those details point to continued strength in the manufacturing sector. <\/em><\/strong><\/p>\n

MARKETS AND FED POLICY IMPLICATIONS:<\/strong> Housing continues to improve even if the gains are inconsistent.<\/em><\/strong>\u00c2\u00a0 Builders are a pretty confident bunch and that can only be because they are seeing activity pick up.<\/em><\/strong>\u00c2\u00a0 Thus, the fall off in construction activity should not be viewed as any sign of weakness.\u00c2\u00a0 With the labor market tightening, Janet Yellen may be repeating her point that if the data are stronger than expected, the Fed is prepared to act sooner than whatever the term \u00e2\u20ac\u0153extended period\u00e2\u20ac\u009d means. <\/em><\/strong>\u00c2\u00a0Indeed, if housing starts do bounce back and manufacturing continues to grow strongly, that is precisely what the Fed will have to do.\u00c2\u00a0 Regardless, investors may be a bit confused by the inconsistencies of these numbers but that has never stopped them before.<\/p>\n

A further thought on the Fed\u00e2\u20ac\u2122s leaving in \u00e2\u20ac\u0153extended period\u00e2\u20ac\u009d in the statement.\u00c2\u00a0 Given her weird comments about the meaning of the phrase, that it was not calendar based but data based, I can only conclude that the Fed members would like to remove the words but only when they think the markets will not overreact.\u00c2\u00a0 They don\u00e2\u20ac\u2122t want another 100 basis point gap up in rates.\u00c2\u00a0 I suspect that as soon as there are consistently robust job gains and the unemployment rate drops below 6%, which could happen by the end of the year, the phrase will be removed.\u00c2\u00a0 December is my guess.<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: Starts: -14.4%; 1-Family: -2.4%; Permits: -5.4%; 1-Family: -0.8%\/Claims: 280,000 (down 36,000) IN A NUTSHELL: \u00c2\u00a0\u00c2\u00a0\u00e2\u20ac\u0153Home construction keeps bouncing around but with builder confidence soaring, it is likely the August slump will be followed by a September surge.\u00e2\u20ac\u009d WHAT IT MEANS: \u00c2\u00a0Housing starts cratered in August but the Alfred E. Neuman in me holds … Continue reading August Housing Starts and Permits and Jobless Claims<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,18,24],"tags":[],"class_list":["post-314","post","type-post","status-publish","format-standard","hentry","category-economic-indicators","category-housing-starts","category-weekly-jobless-claims"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/314","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=314"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/314\/revisions"}],"predecessor-version":[{"id":315,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/314\/revisions\/315"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=314"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=314"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=314"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}