In this week’s economic review, reports featured strength in pending home sales, home prices, consumer confidence, and job growth, as well as the Fed’s as-expected decision to leave rates unchanged.
Despite December’s existing home sales drop, pending home sales are up a strong 1.6 percent from November and may point to stronger sales reports in January and February. Year-over-year, this index is up 0.3 percent.
According to the Case-Shiller Home Price Index, prices rose sharply in November, up 0.9 percent, for the highest monthly gain since March 2015. November’s pricing pushed the year-over-year index up 0.2 percent to 5.3 percent, which is trending low from 2015.
Following December’s 15-year high, the consumer confidence index held steady in January at 111.8. Dropping 1.5 points from December, the decline was mostly due to consumers’ outlooks on jobs. More consumers are predicting there will be fewer jobs six months from now and fewer consumers are saying there will be more. Expectations for income prospects were also down in the report.
Contrary to consumers’ feelings on job growth, the ADP Employment Report, released on Wednesday, predicted substantial strength for January’s Employment Situation. ADP called for payroll growth to reach 246,000, which was well above consensus ranges of 160,000 to 185,000.
While Friday’s employment report did not quite reach ADP estimates, January payroll growth did exceed expectations at 227,000. This is the best reading since September and well above last year’s average of 187,000. The unemployment rate increase 0.1 percent while the labor force participation rate jumped 0.2 tenths higher.
Wage growth was the surprise component of January’s report with only a slight gain in average hourly earnings of 0.1 percent. This follows the downwardly revised December report from 0.4 to 0.2. Year-over-year, this component had been climbing to a 3 percent gain but is now back down to 2.5 percent.
This week in the economy:
- The 30-year fixed-rate average held steady as of February 2 with rates at 4.19 percent with 0.5 points, according to Freddie Mac.
- Purchase applications fell a seasonally adjusted 6.0 percent in the week of January 27, according to MBA Mortgage Applications. Refinance activity also declined by 1.0 percent.
- Initial jobless claims data fell 14,000 in the January 28 week to 246,000, according to Bloomberg. The 4-week average has held below the 250,000 mark for three straight weeks with this last week’s data moving it to 248,000.
- The Bloomberg Consumer Comfort Index jumped a sharp 1.4 points to 46.6 in the week of January 29, which is near it’s post-election high.
What’s on economic calendar for the week of February 6, 2017:
- Monday – Gallup U.S. Consumer Spending Measure, Labor Market Conditions Index
- Tuesday – JOLTS
- Wednesday – MBA Mortgage Applications
- Thursday – Jobless Claims, Bloomberg Consumer Comfort Index
- Friday – Consumer Sentiment
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