Day: March 28, 2024

First-time claims for U.S. unemployment benefits unexpectedly edged slightly lower in the week ended March 23rd, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims dipped to 210,000, a decrease of 2,000 from the previous week’s revised level of 212,000.

Economists had expected jobless claims to rise to 215,000 from the 210,000 originally reported for the previous week.

The Labor Department said the less volatile four-week moving average also edged down to 211,000, a decrease of 750 from the previous week’s revised average of 211,750.

Meanwhile, the report said continuing claims, a reading on the number of people receiving ongoing unemployment assistance, rose by 24,000 to 1.819 million in the week ended March 16th.

The four-week moving average of continuing claims also crept up to 1,802,750, an increase of 3,500 from the previous week’s revised average of 1,799,250.

“On a trend basis, continued claims are up about 8% y/y, suggesting unemployed individuals are finding it a touch more difficult to obtain new jobs,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

She added, “The Fed doesn’t require significant weakening in the labor market to begin cutting interest rates but does need to be confident the job market is balanced enough to support a continued slowing in wage growth.”

Next Friday, the Labor Department is scheduled to release its more closely watched report on employment in the month of March.

Economists currently expect employment to jump by 200,000 jobs in March after surging by 275,000 jobs in February, while the unemployment rate is expected to hold at 3.9 percent.

The U.S. economy unexpectedly grew by more than previously estimated in the fourth quarter of 2023, the Commerce Department revealed in a report released on Thursday.

Revised data showed real gross domestic product surged by 3.4 percent in the fourth quarter compared to the previously reported 3.2 percent jump. Economists had expected the pace of GDP growth to be unrevised.

The Commerce Department said the stronger than previously estimated growth primarily reflected upward revisions to consumer spending and nonresidential fixed investment that were partly offset by a downward revision to private inventory investment.

“While the strong growth to end 2023 was impressive on its own, it also helps explain the economic resilience that we’ve seen throughout the first quarter, as the positive momentum from the end of last year has carried over into 2024,” said Sam Millette, Director of Fixed Income for Commonwealth Financial Network.

He added, “While economists still expect to see slowing growth in the first quarter compared to the end of last year, slowing growth is still growth and the economic backdrop is expected to remain supportive for markets.”

Despite the upward revision, the GDP growth in the fourth quarter still reflects a notable slowdown from the 4.9 percent spike seen in the third quarter.

The deceleration primarily reflected a downturn in private inventory investment and slowdowns in federal government spending and residential fixed investment.

Meanwhile, the report said the GDP growth in the fourth quarter primarily reflected increases in consumer spending, state and local government spending, exports, nonresidential fixed investment, federal government spending, and residential fixed investment.

The positive contributions were partly offset by a decrease in private inventory investment and an increase in imports, which are a subtraction in the calculation of GDP.

On the inflation front, the increase in consumer prices in the fourth quarter was unrevised at 1.8 percent, while the increase in core prices, which exclude food and energy prices, was downwardly revised to 2.0 percent from 2.1 percent.

A report released by MNI Indicators on Thursday showed Chicago-area business activity unexpectedly contracted at an accelerated rate in the month of March.

MNI Indicators said its Chicago business barometer fell to 41.4 in March from 44.0 in February, with a reading below 50 indicating contraction. Economists had expected the index to rise to 46.0.

The Chicago business barometer decreased for the fourth consecutive month, falling to its lowest level since May 2023.

The continued decline by the business barometer partly reflected a notable reduction in order backlogs, as the order backlogs plunged by 11.4 points to its third lowest level of the past 15 years.

The new orders index also fell by 3.4 points to the lowest level since September 2023, while the supplier deliveries index dipped by 1.6 points to the lowest level since October 2023.

Meanwhile, MNI Indicators said a gain in employment helped limited the downside, with the employment index rebounding by 6.4 points.

The report also said the prices paid index slid by 2.1 points to the lowest since November 2023 due to organizations being proactive on costs.

After reporting a sharp pullback in U.S. pending home sales in the previous month, the National Association of Realtors released a report on Thursday showing a notable rebound by pending home sales in the month of February.

NAR said its pending home sales index shot up by 1.6 percent to 75.6 in February after plunging by 4.7 percent to a revised reading of 74.4 in January.

Economists had expected pending home sales to jump by 1.5 percent compared to the 4.9 percent nosedive originally reported for the previous month.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

“While modest sales growth might not stir excitement, it shows slow and steady progress from the lows of late last year,” said NAR Chief Economist Lawrence Yun. “Ongoing job gains are clearly increasing demand along with more inventory.”

The rebound in pending home sales partly reflected strength in the Midwest, where pending home sales soared by 10.6 percent.

Pending home sales in the South also jumped by 1.1 percent, while pending sales in the Northeast dipped by 0.3 percent and pending sales in the West tumbled by 6.5 percent.

“The high-cost regions in the Northeast and West experienced pullbacks due to affordability challenges,” said Yun. “Home prices rising faster than income growth is not healthy and adds challenges for first-time buyers.”

On Monday, the Commerce Department released a separate report showing new home sales in the U.S. unexpectedly decreased in the month of February.

The Commerce Department said new home sales dipped by 0.3 percent to an annual rate of 662,000 in February after jumping by 1.7 percent to a revised rate of 664,000 in January.

Economists had expected new home sales to surge by 2.9 percent to a rate of 680,000 from the 661,000 originally reported for the previous month.

Despite the monthly pullback, new home sales in February were still up by 5.9 percent compared to the same month a year ago.

The University of Michigan released revised data on Thursday showing an unexpected improvement in U.S. consumer sentiment in the month of March.

The report said the consumer sentiment index for March was upwardly revised to 79.4 from the preliminary reading of 76.5. Economists had expected the reading to be unrevised.

With the unexpected upward revision, the consumer sentiment index for March is now above the final February reading of 76.9. The index also reached its highest level since hitting 81.2 in July 2021.

The current economic conditions index climbed to 82.5 in March from 79.4 in February, while the index of consumer expectations rose to 77.4 in March from 75.2 in February.

“Overall, sentiment is essentially unchanged throughout the first quarter of 2024, remaining just shy of the midpoint between the pre-pandemic level of sentiment and the historic trough from June 2022,” said Surveys of Consumers Director Joanne Hsu.

“This stability reflects a perception among consumers that the economy has been holding steady in its current state,” she added. “As the election season progresses and debates over economic policy become more salient for consumers, their outlook for the economy could become more volatile in the months ahead.”

Meanwhile, the report said year-ahead inflation expectations edged down to 2.9 percent in March from 3.0 percent in February, remaining within the 2.3-3.0 percent range seen in 2018 and 2019 for the third straight month.

Long-run inflation expectations also slipped to 2.8 percent in March from 2.9 percent in February but remain remain modestly elevated relative compared to the 2.2-2.6 percent range seen in the two years pre-pandemic.