Home Sales, Jobs Data Further Bolster Economic Outlook

Sales Of Existing Homes In U.S. Rise To 10-Month High
Mike Kane/Bloomberg via Getty Images
By Lucia Mutikani

WASHINGTON -- U.S. home resales rose to a 10-month high in July and the number of Americans filing new claims for unemployment benefits fell last week, signaling strength in the economy early in the third quarter.

The growth outlook was further buoyed by other reports Thursday showing factory activity in the mid-Atlantic region hit its highest level since March 2011 in August while a gauge of future economic activity increased solidly last month.

The National Association of Realtors said existing home sales increased 2.4 percent to an annual rate of 5.15 million units. That was the highest reading since last September and confounded economists' expectations for a pullback.

It goes some way in allaying fears about a relapse in the housing sector recovery, which until recently appears to have stagnated.

Home resales have now increased for four straight months after the housing market recovery stalled in the second half of 2013 following a run-up in mortgage rates.

"It goes some way in allaying fears about a relapse in the housing sector recovery, which until recently appears to have stagnated," said Millan Mulraine, deputy chief economist at TD Securities in New York.

In a separate report, the Labor Department said initial claims for state unemployment benefits fell 14,000 to a seasonally adjusted 298,000 for the week ended Aug. 16. That pointed to a sustained improvement in labor market conditions.

The four-week average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 4,750 to 300,750. But at that level it is consistent with solid job growth and claims are back to pre-recession levels.

U.S. stocks were trading higher, with the S&P 500 index hitting an intraday record. The housing index was up 0.27 percent, with PulteGroup (PHM) gaining 0.26 percent.

The dollar was little changed against a basket of currencies while prices for U.S. Treasury debt rose marginally.

Firming Labor Market

The jobless claims report covered the period during which the government surveyed employers for August's nonfarm payrolls data. The four-week average of claims fell 8,500 between the July and August survey periods, suggesting another month of relatively strong job gains.

Nonfarm payrolls increased by 209,000 in July, marking the sixth consecutive month that job growth topped 200,000, a sign of strength last seen in 1997. The firming jobs picture appears to have caught policymakers by surprise.

Minutes of the Federal Reserve's July 29-30 policy meeting published Wednesday showed officials viewing the improvement in labor market conditions as "greater than anticipated" and hinted that that could lead to an early interest rate increase.

The U.S. central bank had previously termed labor market slack "significant" but the minutes showed many policymakers thought this characterization "might have to change before long."

The Fed has held its benchmark interest rate near zero since December 2008. The economy grew at a 4 percent annual rate in the second quarter. Growth estimates for the third quarter are currently around a 3 percent pace.

In a third report, financial data firm Markit said its preliminary, or "flash," U.S. Manufacturing Purchasing Managers Index rose to 58 this month, the highest since April 2010, from 55.8 in July.

That show of strength was corroborated by a separate report from the Philadelphia Federal Reserve Bank, which showed its business activity index increased to 28 this month, the highest since March 2011, from 23.9 in July. Any reading above zero indicates expansion in the region's manufacturing.

"Overall, today's Philly Fed and Markit manufacturing surveys indicate continued healthy growth in the manufacturing sector in August," said Dean Maki, chief U.S. economist at Barclays in New York.

A fifth report from the Conference Board showed its Leading Economic Index increased 0.9 percent last month after advancing 0.6 percent in June.

-Additional reporting by Jason Lange in Washington and Gertrude Chavez-Dreyfuss in New York.


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16 Comments

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Iselin007

And today Burger King prepares to do a merger so they can move their headquarters to Canada. Lots of reasons why the market is being spun and one of them is they all know the job market is crap! An economy built on crap eventually gets flushed!

August 26 2014 at 12:40 AM Report abuse rate up rate down Reply
Iselin007

New Home Sales Fall Again in July as Supply Builds

Aug 25th 2014 10:07AM

Updated Aug 25th 2014 11:17AM

Wow I guess the story changed!!

August 26 2014 at 12:22 AM Report abuse rate up rate down Reply
gee.effwye

Lots of layoffs today & more coming tomorrow at my jobsite. This is what happens in construction.....the job finishes up and layoffs happen.......even construction jobs on roads, bridges and highways funded by borrowed government tax dollars.

August 21 2014 at 9:18 PM Report abuse +1 rate up rate down Reply
teabuster2

truu.liberal

LMAO

You're EXACTLY the sort of pathetic dunce that Insurance Panda had in mind when they designed this campaign to exploit America's most ignorant buffoons with this marketing campaign. The Insurance Panda founders literally sat around a table and asked each other, "where can we find the very dumbest turds on the face of the earth". Another replied, "well, unemployable incompetents like someone like to humiliate themselves on Daily Finance", and the plan was sealed.

Every time I become completely convinced there is no possible way for you to become any dumber, somehow you rise to the challenge.

Damn fine work, dunce!
===============================================
You mean to say, that, you're not humiliated by posting such blatant stupidity.

August 21 2014 at 7:59 PM Report abuse -4 rate up rate down Reply
3 replies to teabuster2's comment
tyceragab

The current uptick in auto sales, new jobs, housing sales, etc. is as good as it gets, and the weak recovery(if you can call it that) unravels from here.

The reality is that nothing has been done to address the structural rot at the heart of the U.S. economy. You keep shoving in the same inputs, and you guarantee the same output: another crash of credit bubbles and all the malinvestments enabled by monetary heroin.

Reality: In the US you are either an owner or a serf (pretending to be rich as you rack up more and more debt to impress your neighbors...who by the way are as broke as you...LOL)

America isn’t what it used to be. As a graduate student in my mid-twenties in NYC, here is what I know: I plan to graduate, get a decent job (thankfully my field is not in the toilet like so many others), live in a small house, minimize the number of possessions I have, pay off my student loan debt, save as much as I can for my children's education and my retirement, pay my $350/month health insurance premiums and my $25/month auto insurance premiums (thanks Insurance Panda). I won't have the big suburban house, the fancy cars, the extraneous material possessions. Gifts will be experiences with loved ones, not things. Vacations will be camping, not at resorts.

My generation is looking at a very different reality than we were promised by our parents. In some ways, it's a disappointment. In other ways, it seems a lot healthier than a life of excess. Mostly, it's paying the debts of the elder generations who have misspent our futures on war (I was in middle school when you said 'Go to war, twice, for no reason'), supporting the elite wealthy class, and oppressing the poor and the sick. Don't you dare call me entitled, or lazy, or self-centered, or unprepared. I'm well prepared to fight for myself and my family. There's no other way to survive.

August 21 2014 at 3:21 PM Report abuse -2 rate up rate down Reply
2 replies to tyceragab's comment
teabuster2

I like you comment.

August 21 2014 at 5:54 PM Report abuse -3 rate up rate down Reply
2 replies to teabuster2's comment
truu.liberal

LMAO

You're EXACTLY the sort of pathetic dunce that Insurance Panda had in mind when they designed this campaign to exploit America's most ignorant buffoons with this marketing campaign. The Insurance Panda founders literally sat around a table and asked each other, "where can we find the very dumbest turds on the face of the earth". Another replied, "well, unemployable incompetents like someone like to humiliate themselves on Daily Finance", and the plan was sealed.

Every time I become completely convinced there is no possible way for you to become any dumber, somehow you rise to the challenge.

Damn fine work, dunce!

August 21 2014 at 7:41 PM Report abuse -2 rate up rate down
Iselin007

Right now the military doesn't accept over 60% of those able to join but I am sure later on they'll beforced to take them.

August 26 2014 at 12:28 AM Report abuse rate up rate down
gee.effwye

Then vote for constitutional connservatives, spammer.

August 21 2014 at 10:13 PM Report abuse +1 rate up rate down Reply
createidea

WASHINGTON -- U.S. home resales rose to a 10-month high in July and the number of Americans filing new claims for unemployment benefits fell last week, signaling strength in the economy early in the third quarter....

LOL !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Yeah, sure.

August 21 2014 at 2:32 PM Report abuse -1 rate up rate down Reply
1 reply to createidea's comment
Iselin007

What a crock of crap! So far they haven't convinced the rest of us.

August 26 2014 at 12:30 AM Report abuse rate up rate down Reply
truu.liberal

The Fed is already behind the curve.

While the trailing 12 months CPI is up 2%, exactly in line with the Fed's stated target, this year-over-year number masks an acceleration in inflation. Since the start of 2014, the CPI is up 2.4% at an annual rate versus the 1.2% pace in first seven months of 2013. And over the last 6 months, the CPI is up at an even faster 2.5% annual rate, while the past three months annual rate is a faster yet 2.8%.

In other words, inflation is increasing, while the Fed's massive balance sheet and the trillions in excess reserves they've created precludes them from doing much of anything about it.

August 21 2014 at 11:53 AM Report abuse -3 rate up rate down Reply
1 reply to truu.liberal's comment
teabuster2

More of your typical mindless gibberish.

August 21 2014 at 6:38 PM Report abuse -3 rate up rate down Reply