Economic Roundup: August 23, 2010




In the News

Topping last week's financial news was the increase in unemployment claims. The Department of Labor reported that for the week ending August 14, the advance figure for seasonally adjusted initial claims for unemployment insurance was 500,000, a disappointing increase of 12,000 claims from the previous week's revised figure of 488,000. This was the highest that claims have been in nine months.
Explanations for the jump included increasing layoffs of state and local government workers, as well as an increase in discharges of military personnel and the layoff of temporary U.S. census workers. Regardless of the explanations, the numbers point to continued employment difficulties for the nation.
On the positive side, the nation could be slowly escaping the recession, according to the latest Leading Economic Index (LEI) data from the Conference Board. The U.S. LEI increased 0.1 percent in July to 109.8, following a 0.3 percent decline in June, and a 0.5 percent increase in May.
The LEI comprises 10 key measures of the economy, such as average weekly hours worked; average weekly initial unemployment claims; manufacturers' new orders; building permits for private housing; prices on 500 different stocks; and the money supply. As an index, these measures can help signal peaks and declines in the economy. Naturally, the increase, however slight, was welcome news.
"The indicators point to a slow expansion through the end of the year," says Ken Goldstein, economist at the Conference Board. "With inventory rebuilding moderating, the industrial core of the economy has moved to a slower pace. There appears to be no change in the pace of the service sector. Combined, the result is a weak economy with little forward momentum. However, the good news is that the data do not point to a recession."
"The LEI is growing at its slowest pace since mid-2009 and it has been essentially flat since March," added Conference Board economist Ataman Ozyildirim. "However, the index is still well above pre-recession levels and the CEI remains on a rising trend that began in late 2009."
That said, the new housing market is still shaky, with building permits for new housing in July at a seasonally adjusted rate of 565,000, which was down 3.1 from the revised June rate of 583,000. Authorizations for single-family homes in July were at a rate of 416,000, which is 1.2 percent below June's revised figure of 421,000.
Likewise, starts on construction for single-family homes in July were at a rate of 432,000, 4.2 percent below June's revised figure of 451,000. Overall starts for all types of private housing were up 1.7 percent from June, which was encouraging, but below most real estate watchers' expectations.
This week, monitor the financial news for coverage of existing home sales (August 24) from the National Association of REALTORS®; orders for durable goods (August 25) and new home sales (August 25) from the Census Bureau; gross domestic product (August 27) from the Bureau of Economic Analysis; and consumer sentiment (August 27) from the University of Michigan.

Mark Ott

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