Initial filings for unemployment insurance rose more than expected last week but continued their trend of gradual improvement of the past two years. Sales of existing homes, the largest category of home purchases climbed slightly while manufacturing in the Philadelphia Federal Reserve region slowed dramatically and inflation ticked higher.
Jobless claims rose to 362,000 in the week of February 15th, 20,000 more than the upwardly revised total of the prior week. The four week moving average, a more stable measure, moved up to 360,800 after registering 352,800 and 351,000 in the prior two weeks, the lowest averages in almost five years.
Existing home sales climbed 0.4% in February to a 4.92 million annualized rate. The previous month’s transactions were revised down to 4.90 million from 4.94 million. Sales have moved steadily higher from the post-recession low of 3.45 million in July 2010 and are now just above the monthly five year average of 4.42 million, though they are still below the two decade average of 5.31 million per year. Available inventory sank to the 1.74 million, the fewest number of previously occupied homes for sale since December 1999 and a supply that would last for 4.2 months at the current sales rate, the smallest inventory clearance time in almost eight years.
Economic activity in the Philadelphia Federal Reserve District, an area comprising Eastern Pennsylvania, Delaware and Southern New Jersey, declined sharply in February. General business activity fell to -12.5 in February from 1.0 the prior month. This is in contrast to the Empire State survey from the New York Fed last Friday which surged to 10.04 from -7.78 in January. New Orders and employees were bright spots in the New York survey, jumping to 13.31 and 8.08 from negative scores in January. The Philadelphia poll showed the opposite movement with new orders falling to -7.80 in February from -4.30 and employees moving to just positive at 0.90 from -5.20.
Inflation remained subdued in January as it has since the financial crash, placing no pressure on the Federal Reserve to modify its quantitative easing policy.
Headline inflation was unchanged in January marginally below the 0.1% prediction. Consumer price changes excluding those of food and energy, the 'core' index gained 0.3% after a 0.1% rise in December. The yearly rates for both indices are quiescent, 1.6% in January for CPI and 1.9% for core CPI.
Chief Market Strategist