1)Initial jobless claims fell to 222k from 226k last week and that is 6k under the estimate. The 4 week average though rose 2k to 221k.
2)Core retail sales were better than expected in October by 4 tenths with its 7 tenths gain and September was revised up by 2 tenths to a rise of .6%. The y/o/y gain was 6.5%.
3)In Realtor.com’s report on October rental rates they said “the US rental market experienced single-digit growth for the 3rd month in a row after 9 months of slowing from January’s peak 17.4% growth. The median rent growth across the top 50 metros slowed to 4.7% y/o/y for 0-2 bedroom properties. It is the lowest growth rate in 18 months but is still nearly 1.5 times faster than the growth rate seen just before the pandemic hit in March 2020.”
4)Headline PPI in October was up .2% m/o/m, half the estimate after a .2% increase in September which was revised down by 2 tenths. The core rate was unchanged m/o/m, 3 tenths less than expected and September was revised down by one tenth. If we also take out trade, prices were up .2% m/o/m, one tenth below the forecast and the prior month was also revised lower by one tenth. Versus last year, headline PPI was higher by 8%, 6.7% ex food and energy and 5.4% also taking out trade. Goods prices rose .6% m/o/m with food up by .5% and energy higher by 2.7% m/o/m but taking both out saw goods prices down by one tenth. Core goods prices are up 6.6% y/o/y. Service prices fell one tenth m/o/m with trade lower by .5% and transportation/warehousing weakening by two tenths and lower for the 4th straight month (though still up 16% y/o/y). Service prices are up 6.3% y/o/y.
5)After 3 straight months of below zero prints, the November NY manufacturing index was +4.5, about 10 pts better than anticipated. The internals though were very mixed. A negative was the 6 month business outlook which fell to -6.1 and that is just .1 pt off the weakest since 2001.
6)In the September TIC data a net $60.4b of US Treasury notes and bonds were purchased bringing the year to date amount to $614.6b. Most came from the Caribbean and the UK. Japan and China shed holdings.
7)The Cass Freight October index rose .3% m/o/m seasonally adjusted while rising by 2.9% y/o/y vs 4.8% in September. They said “with freight demand hit by inflation, substitution from goods back to services, and now excess inventory, the improvement in the past few months is still a little puzzling.” And they gave a few reasons why, “unique comparisons, inventory building ahead of the holidays, repositioning of mistimed inventory, consumers getting ahead of rising interest rates, and easing supply constraints, particularly in auto production.” They though don’t expect this to last as import trends are “quickly declining.” The inferred freight rate “slowed to 7.9% y/o/y growth in October, from 16% y/o/y growth in September.” High fuel prices (and associated surcharges) are keeping it elevated but the slowdown is “as the result of the looser freight market supply/demand balance, and a downturn is nearing on a y/o/y basis.”
8)The November German ZEW investor confidence index on their economy improved to -36.7 from -59.2 and that was well better than the estimate of -51. Current conditions also was less negative. The ZEW said “This is likely to be related above all to the hope that inflation rates will fall soon…However, the economic outlook for the German economy is still clearly negative.”
9)The Philippines central bank (BSP) today raised rates by 75 bps to 5% and the Bank of Indonesia (BI) hiked by 50 bps to 5.25%. Both as expected.
10)The weak yen continues to goose both exports and imports in Japan. Exports in October rose 25.3% y/o/y, though just below the estimate of up 29.3% and led by auto’s and semi equipment. Imports, driven by higher energy costs, spiked by 53.5% y/o/y vs the forecast of up 50%. The Japanese trade balance, after so many years of surpluses, is now in deficit for 15 months in a row.
11)Australia saw a better than expected October jobs figure with their unemployment falling by one tenth to just 3.4% and the number of jobs added totaling 32.2k, about double the estimate.
1)Continuing claims have now risen back above 1.5mm at 1.507mm and that is the most since late March.
2)The November NAHB home builder survey deteriorated again, falling to 33 from 38 and 3 pts below the estimate. This index has fallen every single month this year, is down by 36 pts over the past 6 months and is just 3 pts from matching the Covid low. Present conditions fell 6 pts m/o/m to 39 and the Future outlook was lower by 4 pts to 31. Prospective Buyers Traffic dropped another 5 pts to just 20 vs the Covid low of 13 and compares with the 71 level it stood as we entered 2022. The NAHB said “To bring more buyers into the marketplace, 59% of the builders report using incentives, with a big increase in usage from September to November. For example, in November, 25% of builders say they are paying points for buyers, up from 13% in September. Mortgage rate buy-downs rose from 19% to 27% over the same time frame. And 37% of builders cut prices in November, up from 26% in September, with an average price of reduction of 6%.”
3)Existing home sales in October totaled 4.43mm, a touch above expectations but down from 4.71mm in September and the lowest print since December 2011 if we take out the covid plunge. The median home price gain moderated to ‘just’ 6.6%, the slowest since the depths of the covid shutdowns and months’ supply rose to 3.3 which is the most since June 2020 but compares to 4 months in October 2019. The unaffordability for many first time buyers is why they only made up 28% of purchases, remaining below 30% for the 4th straight month. All cash buyers, who of course don’t need a mortgage, were 26% of buyers from 22% in September and 24% in August. Also, and not surprisingly at this point, homes are staying on the market longer, in October by 21 days vs 19 in September, 16 in August and 14 in the two months before. That compares with 18 days in October 2021.
4)Single family starts in October fell to just 855k, down from 911k in September and that is the least since May 2020 in the depths of the Covid shutdown. Multi family continues to be where the strength is as more rent when they can’t afford to buy. Starts here held steady at 570k vs 577k in September. Single family permits also deteriorated, shrinking to 839k from 870k last month and vs 900k in the month before, 932k in the month before that and over 1mm back in May. That is also the lowest since May 2020. Again, multi family stood out by holding steady at 687k vs 694k in September and vs 642k in August.
5)The October NY Fed’s Consumer Expectations survey saw one yr inflation expectations jump to 5.9% from 5.4% in September and the 3 yr look rising by 2 tenths to 3.1%. “Both increases were broad based across age, education, and income groups” said the NY Fed while “The median expected change in gas prices rose by 4.3 percentage points to 4.8%, the largest one month increase on record.” Higher food price expectations rose by 7 percentage points to 7.6% and rose one tenth for rents to a still very high 9.8%. The expected cost of college fell by 4 tenths while remaining unchanged for medical care. There was deterioration on the views of the labor market as “mean probability that the US unemployment rate will be higher one yr from now increased to 42.9%, the highest reading since April 2020 from 39.1% in September” and was “most pronounced for respondents with no more than a high school education and those with annual household incomes between $50-100k.” But, there was a 7 tenths rise in “the mean perceived probability of finding a job (if one’s current job was lost).” One yr earnings expectations rose by one tenth to 3% and has been in a 2.8-3% range over the past year. Broadly for household income, the expected growth rose to 4.3%, a series high, from 3.5% in September.
6)The October US Architecture Billings Index fell under 50 at 47.7 from 51.7 in September. The AIA chief economist said “Economic headwinds have been steadily mounting, and finally led to weakening demand for new projects. Firm backlogs are healthy and will hopefully provide healthy levels of design activity against fewer new projects entering the pipeline should this weakness persist.”
7)US IP in October fell .1% m/o/m, 2 tenths less than expected and September was revised down by 3 tenths. Manufacturing production specifically missed the estimate with also a downward revision but auto production was stronger.
8)The November Philly manufacturing index deteriorated further to -19.4 from -8.7. It’s now negative for the 5th month in the past 6. The 6 month business outlook was -7.1 from -14.9 last month but in contraction also for 6 months in a row.
9)October import prices fell m/o/m but not as much as expected. Import prices ex petro fell .2% m/o/m vs the estimate of down .8% and September was revised up by 2 tenths. They are up by 3% y/o/y with a stronger dollar helping to keep a lid on the cost of these imports.
10)Challenger, Gray and Christmas quantified the lost jobs in tech. They said “As layoffs begin to pick up, the bulk of them are occurring in the technology space…Technology companies have announced plans to cut 31,200 jobs in November. This more than doubles the 28,207 cuts the industry has announced from January to October of this year.”
11)CPI in October in Japan rose 3.7% y/o/y headline and 2.5% ex food and energy with both one tenth more than expected. If you take out the influence of value added tax hikes, that is a 30 yr high.
12)Singapore said its exports fell 5.6% y/o/y and that was more than expectations of down 1.7%. Exports to China fell by 32%. Product wise, the 9.3% fall in electronics exports led the way.
13)Reflecting the continued challenges in the Chinese residential real estate market, home price there in October fell for the 14th straight month m/o/m and the drop this past month was the biggest of them all, down by .37%. Of the 70 cities surveyed, prices fell in 58 cities m/o/m for new homes and in 62 for existing homes.
14)The October economic data out of China was pretty mixed. The consumer continues to be under pressure (whether because they are locked up or just don’t want to spend) with retail sales declining by .5% m/o/m, worse than the estimate of up .7%. Industrial production rose 5% y/o/y but that was just under the estimate. Not surprisingly, property investment dropped by 8.8% ytd y/o/y while fixed asset investment (think broad infrastructure spending) was up 5.8% ytd y/o/y.
15)The October CPI in the UK was up 11.1% y/o/y, 4 tenths more than expected as electricity/gas prices continue to reset higher (somewhat offset by subsidies for the consumer and many businesses). The ONS said inflation would have been 13.8% without the energy price guarantee. The core rate was up by 6.5%, one tenth above the forecast. The retail price index, which is used to mark the price of linkers, was up by 14.2% y/o/y. Wholesale input prices jumped more than anticipated while output charges were about as expected.
16)UK October retail sales ex fuel rose .3% m/o/m, half the estimate of a drop of 1.5% in September (partly due to the ceremonies for QE2). They were down by 6.7% y/o/y and that’s the 7th straight month of y/o/y declines.
17)The UK unemployment rate rose one tenth to a still low 3.6% for the 3 months ended September with 52k jobs lost, more than the estimate of 25k. Wage growth though continued to accelerate, rising by 5.7% y/o/y ex bonuses’, the best since last August but still well below the 10%ish inflation rate. October jobless claims rose slightly.