In October, the durables dropped by 3.3%M/M, while a marginal increase was expected. The September data was revised from 3.3% M/M to 5.0% M/M.
Orders for computers & electronics plunged by 7.7%M/M, machinery fell by 3.9% M/M and electrical equipment dropped by 3.4% M/M, while primary and fabricated metals showed more moderate declines. Shipments on non-defense capital goods less aircraft, which is an important indicator for GDP growth, dropped by 1.5% M/M in October, while the previous figure was upwardly adjusted from 0.4% M/M to 1.0% M/M.
Although this figure is surely disappointing, the sharp upward revision in the previous month’s figure raises questions about the accuracy of the October data.
New home sales
US new home sales dropped by 8.1% M/M in October to a total level of 283,000, which was disappointing as markets were seeking for a slight increase. Regional details show only an increase in the South (3.1% M/M), while new home sales fell sharply in the West (-23.9% M/M), Midwest (-20.4% M/M) and Northeast (-12.1%M/M).
The number of homes for sale rose slightly (from 203,000 to 202,000), but remains depressed and month’s supply increased from 7.9 to 8.6. Both mean (-13.9% M/M) and median (-8.0% M/M) prices dropped significantly in October. New home sales are again very close to record low levels, confirming that the US housing market remains extremely weak as unemployment remains high, despite recent signs of improvement, and credit is still tight.
Initial jobless claims
In the week ending with November 20th, US jobless claims fell back to the lowest level since July 2008, while the consensus was looking for only a slight decline. Initial claims dropped by 34,000, from an upwardly revised 441,000 to 407,000.
Also continuing claims, which are reported with an extra week lag, surprised on the downside of expectations. In the week ending with November 13th, continuing claims dropped by 142,000 from an upwardly revised 4,324,000 to 4,182,000, which is the lowest level since November 2008. After the improvement in the payrolls last month, this outcome provides further evidence that the US labor market is gaining strength after a dip in the previous months.
Content provided by: KBC Bank