Initial jobless claims fell under 200k at 190k vs the estimate of 214k and down from 205k last week. The 4 week average fell to 206k from 213k in the week before. Delayed by a week, continuing claims rose 17k to 1.647mm but after falling by 67k in the week before.
Bottom line, as the MLK holiday likely influenced the figure, wait until next week to get a cleaner report. That said, we know the level of filings remains very low as the first impact of the slowing economy on the labor market is a reduction in the pace of firing’s rather than any notable rise in firing’s outside of tech and financial services (related to housing/mortgages).
The January Philly manufacturing index remained below zero for a 5th straight month and the 7th in the past 8. At -8.9 it still though is up slightly from the -13.7 in December and a bit better than feared, particularly after the disastrous NY figure seen this week. New orders have been negative now for an 8th straight month at -10.9. Backlogs remained negative too at -19.2. Inventories were just above zero after 4 months below. Employment did rebound after the December weakness and the workweek rose too. Delivery times were negative again while prices paid fell but those received rose a touch.
As for the 6 month outlook, after 7 months in a row in expected contraction, it rose to +4.9. Expectations for pricing declined as did capital spending plans.
Bottom line, after a contraction in manufacturing in the last two months of 2022 as seen by the ISM, based on what’s been seen from the NY and Philly Fed survey’s, expect that decline to continue on in January.
Philly Mfr’g
When we include the November revision, housing starts in December was about as expected. Single family starts rebounded to a 4 month high at 909k vs 817k in the month before. Multi family starts slowed to 473k from 584k.
Offsetting the bounce in single family starts is continued shrinkage in the number of permits which slowed to 730k, the least since July 2016 when not including covid. Multi family permits rose 30k m/o/m after falling by 100k in the month prior.
Bottom line, the single family market will be slow this year for reasons well known. Multi family has some cross currents here. There is a lot of building currently going on with projects started over the past few years. Added supply and rising vacancies will further slow rental increases. On the other hand, I’m hearing more stories about projects on the drawing board that are now getting shelved because of the higher cost of funding and those slower expected rent gains.
Single Family Permits
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.