US: Housing, employment and economic activity data


In the week ending February 12, 248K applications for unemployment benefits were filed in the US. That was above the median economist estimate of 219K, and also above last week’s revised 225K reading from 223K. This meant that the four-week average fell from 253,750 the previous week to 243,250. Continuing requests fell to 1.593 million in the week ended Feb. 5, below the expected 1.605 million and down from last week’s revised 1.619 million reading from 1.621 million. The insured unemployment rate was unchanged at 1.2% in the week ended Feb.


The first jobless claims for the period ending February 12 coincide with the survey week of the February employment report. If our forecast comes true, demands for February and January payrolls will have fallen by 72,000 between the weeks of the survey, which means a strong net hiring rate. There is an increase in unemployment applications compared to the previous week, but 248K is not a negative figure. ISM details generally confirm job gains in key sectors, although there were problems with Omicron in January. In terms of non-farm payrolls, data that will not spoil the general standard and will not change the views. The job market remains tight enough. In January, non-farm payrolls increased by 467K. In the employment data to be announced on March 4, it will not be a surprise to see a standardized increase of 300-400K and an unemployment rate that will continue its downward trend.


The US housing market is being watched carefully for clues to its growth and inflation trajectory. Building permits increased by 0.7% month-on-month to 1.899 million in the last 12 months in December, while housing starts decreased by 4.1% month-on-month to 1.628 million in the last 12 months. There may be some stagnation in housing starts due to labor shortages exacerbated by the Omicron epidemic. We will also look at how the lack of existing housing inventory supports the activity in the sector all year. But as an important fact, the Fed is moving to raising interest rates and mortgage rates will go up with it. It is very likely that we will see a housing market that will be affected by the interest and cost phenomenon.


The Philadelphia Fed index of manufacturing activity fell to 16 in February from 23.2 in January. The employment index rose to 32.3 from 26.1 in January. The price paid index fell from 72.5 to 69.3, and the new orders index fell from 17.9 to 14.2. The 6-month expectations index decreased from 28.7 to 28.1, and the capital expenditures index decreased from 26.2 to 21.5. Manufacturing activity in the region continued to expand this month, according to the firms. The survey’s current indicators for overall activity, new orders and shipments fell from last month’s readings but remained positive. The employment index rose and price indices remained high. Future indices continue to show that firms expect growth in the next six months.


Regional activity seems to have been somewhat restrained in February, after an increase in COVID-19 cases due to the Omicron variant in January. The ISM survey pointed to a much less pronounced slowdown than the IHS Markit index. Movements in real operating components, such as supply chain performance and orders, are decisive for momentum in factory activity. Supply bottlenecks are still at play and demand growth has become more erratic as the recovery matures. Therefore, price pressure still remains high. The phenomenon of normalization in supply chains will help ease the pressure on inflation over time. But we don’t get the full indication of that yet.


Since the importance of the data is secondary, the views on the Fed will remain the same. As a precursor, non-farm payrolls, CPI and PCE trends will be very important indicators before the March meeting.

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