3 Numbers: Another upbeat report expected for US jobless claims
- A moderately softer August print for UK retail spending is expected
- US jobless claims should hold near multi-decade lows, boosting jobs outlook
- Will US existing home sales falter in the wake of disappointing new-home sales?
- Volatile data makes it hard to discern the underlying trend in new US housing
“The jobs market continues to do well despite growing uncertainty,” REC’s chief executive said on Wednesday. “However, this drop in employer confidence should raise a red flag. Businesses are continuing to hire to meet demand, but issues like access to labour, Brexit negotiations and political uncertainty are creating nervousness.”
Today’s survey data for the retail industry, however, isn’t expected to deliver a smoking gun. Economists project a modest decline for the August reading of the CBI Distributive Trades Index, which is considered a leading indicator for the hard data on retail sales. Econoday.com’s consensus forecast calls for the benchmark to dip to 16, but that still translates to a modestly bullish number relative to the figures published so far this year.
Nonetheless, the trend in the growth rate of actual retail spending has been slipping in 2017. Retail sales volume rose just 1.3% in year-on-year terms in July.
Chasing bonds has pushed prices up and yields down. The rate on the benchmark 10-year Treasury in mid-day trading on Wednesday, for example, fell below 2.20%, close to a two-month low. Analysts point to the persistence of low inflation and modest economic growth as key drivers for the yield's recent decline.
Early estimates of third-quarter GDP growth, however, look encouraging, according to several sources. Notably, the Atlanta Fed’s GDPNow model is currently looking for output to rise 3.8% –sharply above Q2’s 2.6% increase.
The good news is that most forecasts for Q3 growth show the macro trend holding steady or ramping up. Almost no one at this point is expecting a material slowdown.
Today’s weekly report on new filings for new unemployment benefits will probably support the optimists. Initial jobless claims, a leading indicator for the labour market and the economy overall, are on track to remain close to a multi-decade low.
Econoday.com’s consensus forecast sees claims edging up 5,000 to a seasonally adjusted 237,000 for the week through August 19. But that’s barely higher than the previous week’s reading, which is close to the lowest level since 1973.
It’s risky to analyse the economy with just one indicator, but for today at least the data will provide an optimistic spin from the perspective of the labour market. The implied forecast: employment growth will remain relatively healthy in next week’s payrolls report for August.
Economists were looking for new sales of 610,000 (seasonally adjusted annual rate) – the actual number skidded to 571,000 in July, the lowest level so far this year.
“This looks bad but note that sales over the previous three months were revised up by a total of 46K,” said the chief economist at Pantheon Macro. “Prices are rising, too, but the data are so volatile that it’s hard to be sure what the underlying trend rate of increase is at any given point.”
This much is clear: another disappointing report in today’s today for existing sales – a much larger market – would be hard to overlook. For the moment, however, analysts are thinking positively. Econoday.com’s consensus forecast calls for a moderately firmer number of existing sales – 5.565 million units, up from 5.552 million in June.
If today’s release ends up stumbling, on the other hand, the run of surprisingly weak back-to-back reports will take a bite out of the outlook for the housing market.