by Louis Navellier | March 25, 2013 10:30 am
Last week was a fascinating one in regards to economic news. But before I get to that, let’s take a moment to see what the market taught us:
Last week, new jobless claims ticked up 2,000 to an annual rate of 336,000. Economists had expected claims to climb to a rate of 345,000. Last week’s claims were also revised up by 2,000 to 334,000. Meanwhile, the four-week moving average gapped down by 7,500 to 339,750, the lowest level since February 2008. Jobless claims have been hovering around a five-year low for some time now. This is good news because it reflects a sharp decline in layoffs. However, new hiring still remains somewhat stagnant; this may explain why the Fed insists that it must continue with its efforts to reduce the unemployment rates to 6.5%.
In February, homebuilders ramped up housing starts by 0.8%, reaching an annual rate of 917,000 units. This came above the consensus estimate of a 905,000 rate. Meanwhile, January housing starts were revised up to 910,000. Most notably, construction of single-family homes jumped 0.5% to a rate of 618,000 units.
Last month, building permits also jumped 4.6% to an annualized level of 946,000. This also topped the 915,000 consensus estimate. With these latest results, single-family housing starts and building permits are now at the highest level since June 2008. However, keep in mind that total housing starts are still below pre-recession levels, so we still have room for growth.
In February, sales of existing homes advanced 0.8% to an annual rate of 4.98 million units. This met economists’ expectations yet also represents the highest sales pace in three years. At the same time, the January sales rate was revised up to 4.94 million units. As further evidence of an improving housing market, it now takes an average of 74 days to sell a home, compared with 97 days this time last year. Also encouraging is that median home prices rose 11.6% to $173,600 in the past 12 months.
In February, the Leading Economic Indicators (LEI) rose by 0.5%. This came above economists’ consensus estimate of a 0.4% gain. Eight of the 10 LEI components rose, including building permits, higher stock prices and fewer jobless claims. The two components that dragged the index down were nondefense capital goods orders as well as consumer expectations for business contributions. This is the third straight month that the LEI has risen; it rose 0.5% in January and 0.4% in December. This is a good sign that we’re starting to see broad-based economic improvement and it bodes well for first-quarter GDP growth.
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