On the heels of Wednesday’s news that housing starts took a slight dip in November comes the report that existing home sales rose in all regions last month. For the first time since November 2009, sales of previously-owned homes surpassed the five-million benchmark. The South led the way, with a sales jump of 8.0%, while the Midwest saw an increase of 7.0%.
Housing prices also increased across the country, representing a 2.1% gain from last month, and a 10.1% year-on-year increase. “Again that is a boost for consumer confidence and possibly spending in coming months as that distance widens between the days of common place fears for negative equity and a far more stable market,” Miller Tabak & Co. Chief Economic Strategist Andrew Wilkinson says in an analysis.
Another key indicator coming out Thursday was the Philadelphia Fed’s manufacturing index, which rebounded from -10.7 in November to 8.1 this month, the biggest recovery in points-terms since last October. The Fed’s numbers were generally strong across the board, in categories ranging from general business outlook to new orders to shipments.
“Shipments, orders and employment gauges all roared away from negative territory,” Wilkinson says. “In short, the report appears to be a highly supportive of an improving underlying tone from the economy. Only one measure of the sub-indices (prices paid) eased, which is a minor positive anyway.”
The weekly jobless claims reading was more tempered, showing that the number of claims jumped by 17,000 from the previous week to a seasonally adjusted 361,000. This brings new claims closer in line with pre-Superstorm Sandy levels, and suggests that job growth is moderate.
Although the third quarter U.S. GDP reading was higher than expected — showing a growth pace of 3.1% — Wilkinson notes that the boost was the result of a mild revision to consumer and government spending combined with a stronger net export reading, and not necessarily a cause for long-term optimism. “We should only export signs of weakening external demand to result in a weaker trade picture in the three-months ending December,” he says. “And of course the longer the fiscal cliff stands ahead of us, the greater is the risk to first quarter growth.”
Globally, the yen remains strong against the dollar and — to a lesser extent — the euro, following the announcement of the Bank of Japan’s intention to extend its bill and bond purchase programs. Looking forward to next year, Wilkinson says he “remain[s] bullish on economic prospects for Japan under the return to power of Shinzo Abe’s Liberal Democrat party.”
Gold, on the other hand, “has been struggling under the recent flurry of risk-on investing around the world,” Wilkinson notes, adding that the commodity’s performance does not make sense in light of the declining dollar index.