Econ Wrap-Up: Pending Home Sales and Chicago PMI

12/31/2014
By Jennifer Coombs

Though economic data was far more abundant during the last trading session of the year, the market took its sweet time reacting. Pending home sales increased by 0.8% in the month of November, reporting an index level of 104.8 from a revised 104.0 in October. When broken down by region, there are only narrow differences month-over-month, with small gains in the Northeast (89.1 from 87.9), South (119.7 from 118.3) and West (98.5 from 98.1). The Midwest, however, posted a small decline to 100.0 from 100.6 in the previous month. Final sales of existing homes fizzled out in November, but this report is indiciative of strength for the coming reports for December and January.

The month of December showed quite a few reports with slowdowns in manufactuirng and non-manufacturing. The Chicago purchasing mangers’ index (PMI) was no different, coming in at 58.3 for the month from 60.8 in November. Production, new orders and backlog orders are all at 5-month lows in the Chicago area. One positive that has been see across the other district reports, however, is employment which points to confidence in economic outlooks. All in all, growth has been healthy for the economy in December, but relative to November strength has been subdued.

The holidays are often considered wildcards when it comes to weekly economic data, which is a fact that should limit the overall impact of this week’s jobless claims report. In the US, initial jobless claims rose by 17,000 in the week ended December 27^th to 298,000 compared to the consensus estimate of 290,000 and a revised 281,000K in the previous week. This caused the 4-week rolling average to increase slightly, but it still remains lower than the level from a month ago. The fact that the average is lower for the month should point to a better-than-expected jobs report for December 2014. Continuing claims, which lag by a week, declined by 53,000 and came in at 2.353 million for the week ended December 20^th. This was slightly lower than the consensus reading of 2.375 million and the upwardly-revised previous reading of 2.406 million.

Jennifer Coombs
Wall Street Strategies

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