DailyBubble News
DailyBubble News

Weekly Chemistry & Economic Trends (September 23, 2022)



0.3%

Leading Economic Index

Running tab of macro indicators: 9 out of 20

09-23-22-Macro Table

The number of new jobless claims rose by 5,000 to 213,000 during the week ending 17 September – the first increase in seven weeks. Continued claims declined 2,200 from the previous week’s level, to 1,379,000. Both new jobless claims and continued claims last week have been revised downwards, reflecting a strong labor market. The insured unemployment rate for the week ending September 10 was unchanged at 1.0%. 

09-23-22-Housing

Total housing starts jumped by 12.2% to a 1.58 million pace after three months of consecutive decline. While the reverse in direction was largely unexpected, the levels remained below the cycle peak in December 2021. Most regions posted strong showings this month with the exception of the Northeast region, where housing starts declined. While activities increased in all segments, multi-family outperformed single-family with the best monthly performance in 35 years. That said, with cost of homeownership continuing to rise, housing starts reversed direction again in September. Forward-looking building permits, however, were down 10.0% to 1.52 million units on a seasonally adjusted at annual rate basis with all regions recording losses. It was the fifth consecutive month of decline since March 2022. While the weakness came from both segments, eroding affordability had a larger impact on single-family than multifamily. Rising mortgage rates will continue to exert downward pressure on construction activities going forward.  Homebuilder confidence slid for a ninth consecutive month in August. The Wells Fargo/NAHB Housing Market Index fell 3 points to 46, suggesting that homebuilders are increasingly pessimistic as mortgage rates have topped 6% and homebuilding costs remain high. 

As affordability deteriorated with rising mortgage rates, existing home sales declined 0.4% in August, a level still 19.9% higher Y/Y. Sales were down for the seventh month in a row to a SAAR of 4.80 million. The median sales price was up across all regions and 7.7% higher than the year before. The inventory of unsold existing homes was down at the end of the month after building the 5 previous months. NAR Chief Economist Lawrence Yun points out, “the housing sector is the most sensitive to and experiences the most immediate impacts from the Federal Reserve’s interest rate policy changes.”

09-23-22-LEI

The Conference Board’s Leading Economic Index® (LEI) fell 0.3% in August, slightly worse than expected, and following a 0.5% decline in July. It was the sixth consecutive decline. The index was down 2.7% over the previous six months, a reversal of the 1.7% growth over the previous six-month period. The LEI was off 0.9% Y/Y, the first annual decline since early-2021. The Conference Board projects a recession in the coming quarters.

09-23-22-Survey

SURVEY OF ECONOMIC FORECASTERS

  • The outlook for 2022 and 2023 continues to deteriorate as expectations rise for more aggressive interest rate hikes as the Fed seeks to get inflation under control. Growth is expected to continue to slow through mid-2023.
  • Expectations for U.S. GDP were downwardly revised again and is now expected to grow by just 1.7% in 2022 as the post-lockdown rebound has quickly decelerated amid high inflation and aggressive increases in interest rates. In 2023, forecasters continue to expect U.S. to grow by 0.5%, well below its long-term trend.
  • Consumer spending growth is expected to weaken to a 2.4% Y/Y pace in 2022 before slowing further to a 0.7% gain in 2023.
  • While also slowing, business fixed investment will be a larger contributor to GDP growth in 2022 with an expected 4.2% gain. In 2023, growth in business investment slows further to a 0.8% gain, sharply lower than last month’s forecast.
  • With much weaker growth in the second half of the year, industrial production, is expected to rise 4.2% in 2022 and to fall 0.3% in 2023, a reversal from expectations for a small gain last month.
  • Higher borrowing costs and ongoing supply chain problems continue to hamper vehicle production and sales. As a result, expectations for light vehicle sales were lowered again to 14.0 million in 2022 (below 2020 when automakers were shut down for 2 months) and rising to only 15.0 million in 2023. 
  • As mortgage rates have moved above 6%, expectations for interest rate-sensitive housing were also lower. Housing starts are now expected to come in at 1.57 million in 2022, before slipping to 1.40 million in 2023.
  • The unemployment rate is expected to average 3.7% in 2022 (unchanged from last month’s survey) and 4.3%…



Read More: Weekly Chemistry & Economic Trends (September 23, 2022)

Comments are closed.