Home and Jobs Data Suggests Momentum

 

NYT

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

“The economy is beginning to fire on more cylinders,” said Ryan Sweet, a senior economist at Moody’s Analytic in West Chester, Pa.

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 September and confounded economists’ expectations for a pullback.

It was the fourth consecutive monthly gain in sales, confounding economists, who had expected a decline.

In a further encouraging sign, the share of first-time buyers rose for a second consecutive month and more houses came onto the market, which should temper price increases. Earlier stages of the housing recovery were driven by investors.

Housing activity stagnated in the second half of 2013, weighed down by a run-up in mortgage rates and home prices, but it now appears to be regaining its footing. A report on Tuesday showed a surge in home construction in July.

“We are moving back to a more normal market where it’s driven by the fundamentals of confidence in the economy,” said Budge Huskey, chief executive of Coldwell Banker Real Estate in Madison, N.J.

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. At that level, it is consistent with solid job growth, and claims are back to prerecession levels.

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 has caught Federal Reserve officials by surprise. Minutes of the Fed’s July policy meeting published on Wednesday showed that officials viewed the improvement in labor market conditions as “greater than anticipated” and hinted that it could lead to an early interest rate increase.

In a third report, the financial data firm Markit said its preliminary manufacturing purchasing managers index for the United States rose to 58 this month, the highest point 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 that its business activity index increased to 28.0 this month, the highest point since March 2011, from 23.9 in July. Any reading above zero indicates expansion in the region’s manufacturing.

“Over all, today’s Philly Fed and Markit manufacturing surveys indicate continued healthy growth in the manufacturing sector in August,” said Dean Maki, chief United States economist at Barclays in New York.

 

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