The four-week moving average, a less-volatile measure than the weekly report, declined from 312k to 309k, the lowest since June 2007.
Initial Jobless Claims with 8-week Average Source: Bloomberg Bottom Line: Initial jobless claims continue to decline, suggesting further improvement in the US labor market. Although, even coupled with months of impressive headline job creation, the improvements seen thus far have not translated into wage pressures, a presumed, unofficial prerequisite for the Fed to initiate rate increases.
Also this morning, housing starts fell 9.3% in June from 985k to a 893k unit pace, a nine-month low.
Housing Starts Source: Bloomberg Year-over-year, starts are up 7.5%, thanks to a 38% rise in multi-family starts.
Single-family starts, on the other hand, are down 4.3% over the past 12 months.
The monthly decline was nearly equal across single-family and multi-family starts, down 9.0% and 9.9%, respectively. On a regional basis, however, the decline was centered on the South, down 30%.
Lindsey M. Piegza, Chief Economist (312) 924-0607 [email protected]
800 Shades Creek Parkway Suite 700 Birmingham, AL 35209 205-949-3500 Sterne, Agee & Leach Inc. is Member NYSE, FINRA, SIPC Building permits also slowed at the end of the second quarter, down 4.2% in June to a 963k unit pace. The decline in June was centered on multi-family, down 14.9%. Single-family permits rose 2.6% in June.
Building Permits Source: Bloomberg Over the past 12 months, permits are up 2.7%, thanks to a near 7% annual rise in multi-family permits. Single-family permits are up only 0.6% year-over-year.
Bottom Line: While sales activity has picked up in recent months after a lackluster first quarter, homebuilders remain cautious amid a still uneven recovery. As Chairman Yellen noted in her testimony earlier this week, the housing market activity "has shown little recent progress" as potential buyers are discouraged by higher mortgage rates and rising prices. As rising home prices continue to outpace income growth, many potential homebuyers are being squeezed out of the market, limiting new demand.
-Lindsey Piegza APPENDIX SECTION IMPORTANT DISCLOSURES:
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Appendix Section, Page I July 17, 2014