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Look Back at January 21, 2019 week without much to see

A look back at the January 21 week sees only a handful of data releases and nothing from the Federal Reserve during the communications blackout period around the January 29-30 FOMC meeting.

The fourth week of the partial government shutdown meant the December data for new orders for durable goods and single-family home sales were not released. The durables data for November was released in December, but not the full factory orders data. Numbers of sales of single-family homes was delayed for a second month.

Data related to home sales was not wholly absent in the week. On Tuesday, the NAR released December sales of existing homes which fell to a 4.99 million unit (SAAR) rate, the lowest since late 2015. Some of thee drop off in sales can be explained by a lack of supply in the more sought-after units at lower price points and overall shrinking of stock after Hurricanes Michael and Florence and the wildfires in California. The uptick in mortgage rates in early December probably did not help either. Typically existing home sales account for about 4/5 of the market.

If sales were softer in December, the available data from the FHFA House Price Index in November on Wednesday suggested that upward pressure on housing prices has eased a bit as well but are still on the rise.

The manufacturing surveys for January from the Richmond Fed on Wednesday and the Kansas City Fed Thursday added to the mixed picture of activity in the factory sector. Overall modest expansion seems to be continuing, but not universally. The Richmond Fed Manufacturing Composite Index was a negative for the past two months, a sharp reversal from the strong second half of 2018 that prevailed until December. The Kansas City Fed survey – which included annual revisions – showed its manufacturing index has steadied in January, but at a fairly tepid pace of expansion.

For the service sector in January, the Philadelphia Fed’s Non-Manufacturing Index on Tuesday and the Richmond Fed index for revenues on Wednesday both showed slower activity that was probably at least in part due to the federal government funding impasse. In the prior week, the New York Fed’s business activity index had also declined.

On Thursday, the level of initial jobless claims provided a mild surprise for the week ended January 19. The level fell to 199,000, the first time it has broken below the 200,000-mark since November 1969. Part of the reason was a seasonal adjustment factor that anticipated more claims than were filed. The over 39-year low probably won’t be maintained in the coming week but it does suggest that the labor market is squeezed for resources.

The Conference Board made the decision to delay release of its annual benchmark revisions for the Leading Economic Index for December on Thursday. Three of the components for its index had to be estimated due to the government shutdown and no data. When the data is published, The Conference Board will provide the revised data. The index was down 0.1% in December from November, a negligible decline, but in line with a lower and more uneven performance for the index in recent months. Unsurprisingly, the index was held down by the plunge in stock prices.

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