Last Week’s Economic News in Review December 21, 2016

unnamedRetail sales saw slight gains ahead of the holidays, while housing starts experienced a predictable drop after hitting a nine-year high, and layoffs were down.

Retail Sales

Retail sales for November notched up to $465.5 billion, a slight gain of 0.1 percent over October, and 3.8 percent higher than November 2015, the Census Bureau reported last week. While posting a gain, November’s sales were slightly below market expectations of a 0.3 percent gain for the start of the holiday shopping season.

Key retail growth segments included food services and drinking establishments, which grew 0.8 percent; furniture and home furnishing stores, which gained 0.7 percent; gas stations, which notched up 0.3 percent; and building material and garden equipment and supplies stores, which increased 0.3 percent.

Main economists commented that December could see a larger holiday spike, and particularly among non-store retailers.

“On a year-ago basis, total retail sales were up 3.8 percent in November, indicating that this will be a good year for holiday sales,” PNC Financial Services Group Deputy Chief Economist Gus Faucher wrote in a public statement. “However, gains for traditional retailers will be much weaker due to the increasing reach of online sales.”

Housing Starts

After seeing a nine-year high in October, starts on construction of private housing in November dropped to an annual rate of 1.09 million, which was a whopping 18.7 percent below October’s rate of 1.34 million, which was the highest monthly rate in nine years, according to last week’s report from the Census Bureau.

Compared annually, November’s pace was 6.9 percent below November 2015’s rate of 1.17 million. While the overall monthly figure was a sizable drop, starts on single-family homes fell 4.1 percent from October to a rate of 828,000 in November.

Construction permits for home construction issued in November dropped to an annual rate of 1.2 million, which was 4.7 percent below October’s rate of 1.26 million, and was 6.6 percent below the November 2015’s pace of 1.28 million. Meanwhile, permits issued for single-family homes in November notched up to a rate of 778,000, which was 0.5 percent higher than October’s rate of 774,000.

“The trends in the single-family data still appear to be moving higher over time, which is a favorable signal regarding upcoming single-family construction activity,” JPMorgan Economist Daniel Silver told the Reuters news service.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending December 10 dropped to 254,000, a decline of 4,000 claims from the preceding week’s total of 258,000, the Employment and Training Administration reported last week.

This was slightly below market expectations of 256,000 initial claims, and marked the 93rd straight week that initial claims have fallen below 300,000, a mark that economists consider indicative of a growing job market. This has been the longest such streak since 1970.

The four-week moving average — considered a more accurate gauge of layoffs — totaled 257,750 claims, a gain of 5,250 from the prior week’s average of 252,500.

This week we can expect:

  • Wednesday — Existing home sales for November from the National Association of Realtors.
  • Thursday — Third quarter GDP, third estimate, and personal incomes and spending for November from the Bureau of Economic Analysis; initial jobless claims for last week from the Employment and Training Administration; durable goods orders for November from the Census Bureau; leading economic indicators for November from The Conference Board.
  • Friday — New home sales for November from the Census Bureau; consumer sentiment for December from the University of Michigan Survey of Consumers.
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