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November 29, 2005
A pretty good day for economic data
Plenty of good headlines, but does the good news run deeper? From the NY Times:
Sales of new homes surged to a record in October, the government reported today, bucking recent reports of a slowdown in the roaring housing market.
New home sales jumped 13 percent last month, to an annual pace of 1.42 million, and selling prices increased modestly, the Commerce Department said. The report comes a day after the National Association of Realtors said existing home sales fell 2.7 percent last month and inventories rose to their highest levels in more than two years.
Calculated Risk, as always, has even more on the housing picture. Let's just say he is encouraged. Back to the Times article:
New home sales, which account for about 15 percent of the overall housing market, tend to increase and decrease more erratically from month to month than the far bigger base of existing home sales. Also, the Commerce Department records sales when contracts are signed, rather than when transactions are closed as the Realtors association does for existing home sales.
...
In other economic news, the Conference Board said that its consumer confidence index surged by 13.7 points, to 98.8, after falling for the previous two months. It credited an improving job outlook and falling gasoline prices, which at an average of $2.16 a gallon are below where they were before Hurricane Katrina struck New Orleans.
"While the index remains below its pre-Katrina levels, the shock of the hurricanes and subsequent leap in gas prices has begun wearing off just in time for the holiday season," Lynn Franco, the board's director of consumer research, said in a statement.
Good news, but hard to interpret. Katrina made mincemeat out of consumer confidence. It had to come up, but predicting how much and when is probably best left to a roll of the dice. Give me a couple more data points post-Katrina, then we'll talk.
American manufacturers, particularly aircraft makers, also appear to be in better spirits.
The Commerce Department said today that orders for durable goods - or products that last for more than three years - surged by 3.4 percent last month after falling by 2 percent in September. Economists had been expecting an increase of 1.6 percent, according to a survey by Bloomberg News.
Orders for defense aircraft and parts more than doubled to $7 billion in October, after falling by 2.7 percent in September. Commercial plane orders saw a dramatic 50.4 percent increase, to $11 billion, after dropping by 41.5 percent the month before. Some of the rise was related to the end of a machinists' strike, which hurt production at Boeing in September.
Excluding the transportation sector, however, orders rose just 0.3 percent, far slower than the 1 percent increase forecast by analysts. Orders excluding transportation dropped 0.2 percent in September, a figure the Commerce Department revised today from the 1 percent decline it had reported earlier.
So the slow 0.3% gain may not be as bad in light of the revision of the September data.
All in all, there's nothing that makes me jump up and down, but nothing to make me hang my head either.
UPDATE: Barry Ritholtz is not impressed by the new home sales data. To be fair, the article did point out that new home sales make up a smaller percentage of the real estate market and are notoriously variable. When looking for quotes to pull from the article, I wanted to make sure that I got that in. What the article did say was enough to make me a little skeptical (hence, my opening sentence). But Ritholtz really digs in. Go read what he has to say.
Posted by William Polley at November 29, 2005 12:44 PM
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