U.S. economic data this week was consistent with our expectation for ongoing moderate economic growth through the third quarter. We will see if that actually happened when the first estimate of Q3 GDP is released next Friday morning, October 28.
Consumer inflation increased about as expected, up 0.3 percent in September as energy prices firmed up. The energy prices sub-index gained 2.9 percent for the month with both gasoline and natural gas prices increasing. Consumer food prices were unchanged for the month, as they have been since July. The core CPI (less food and energy) was up a little less than expected, 0.1 percent for the month. Over the last 12 months, core CPI was up by 2.2 percent. Headline CPI was up by 1.5 percent over the past 12 months.
Industrial production increased by 0.1 percent in September, a little less than expected. Manufacturing output was up by 0.2 percent, supported by a small gain in vehicle production. Utility output fell by 1.0 percent.
The Federal Reserve Bank of Philadelphia’s manufacturing index showed improving conditions there in October. The New York Fed’s Empire State showed worsening conditions farther up I-95.
The National Association of Home Builders’ Housing Market Index dipped in early October to 63 from September’s 65. There is still an overall improving trend in the index. Housing starts unexpectedly fell by 9.0 percent in September, to a 1,047,000 unit annual rate, due to a sharp contraction in multifamily projects. The large drop in multifamily building in September is a statistical outlier, but it is not unprecedented. Permits for new residential construction increased by a strong 6.3 percent in September to a 1,225,000 unit rate as multifamily permits surged.
Existing home sales increased by 3.2 percent in September, to a 5.47 million unit annual rate. Months’ supply of available existing homes for sale dipped to a tight 4.5 months’ worth. The median sales prices of a existing home was up by 5.6 percent in September over the previous 12 months.
The Conference Board’s Leading Economic Index flipped back to the positive, gaining 0.2 percent after declining by 0.2 percent in August. Both the coincident and the lagging indexes also gained 0.2 percent in September.
Initial claims for unemployment insurance increased by 13,000 for the week ending October 15, to hit 260,000, still a very low number. Continuing claims increased by 7,000 for the week ending October 8, to reach 2,057,000, also still a very low number.
For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here: CMAEconWeekly 10-21-2016.