In this week’s economic review, hiring gained steam in October, retail sales increased, the Fed moved on rates, and mortgage rates held steady.
While the gap is still quite large, job openings fell back and hirings picked up in October. Openings fell 2 percent to 5.996 million while hires increase 4.4 percent to 5.552 million. October’s reading dropped the gap by approximately 350,000 and is the smallest gap since May 2017.
Consumer Price Index
Headline CPI met expectations in November due to a boost from higher gasoline prices, but CPI minus food and energy edged just 0.1 percent higher. Weakness was centered in apparel (due to holiday discounting), while medical care and housing components slowed.
As expected, the Federal Reserve lifted its benchmark interest rate a quarter point to a range of 1.25 percent to 1.5 percent. The Fed cited that they expect faster grower and lower unemployment in 2018 as the economy continues to strengthen. The decision marks the third rate hike of 2017.
Sales surged past expectations with an 0.8 percent increase in November. October’s report also saw an upward revision from a 0.2 percent gain to a 0.5 percent gain. By sector, e-commerce was unusually strong with a 2.5 percent jump while electronics and appliances rose 2.1 percent. Despite price discounting noted in the consumer price index report, clothing stores posted a gain of 0.7 percent.
This week in the economy:
- Mortgage rates maintained their level as of December 14th. The 30-year average fixed rate was 3.93 percent with 0.5 points, according to Freddie Mac.
- Purchase applications fell a seasonally adjusted 1 percent in the week of December 8th. Refinance applications increased 0.8 percent from the previous week with the refinance share of mortgage activity rising to 52.4 percent – the highest share since January 2017.
- In the week of December 14th, initial jobless claims fell 11,000 to 225,000, easily beating the consensus level of 239,000. The 4-week average dropped nearly 7,000.
The economic calendar for the week of December 18th, 2017:
- Monday – Housing Market Index
- Tuesday – Housing Starts
- Wednesday – MBA Mortgage Applications, Existing Home Sales
- Thursday – GDP, Jobless Claims, FHFA House Price Index, Bloomberg Consumer Comfort Index
- Friday – New Home Sales, Consumer Sentiment
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