US daily data review and preview: Eyes on homes data - Nomura

Analysts at Nomura offered their review of the latest US data and offer their outlook for Friday's final data for the week.

Key Quotes:

"Philly Fed survey: The Philly Fed manufacturing index remained elevated at 22.2 in October, above expectations (Nomura: 21.0, Consensus: 20.0), only slightly below the September reading of 22.9, as industrial sector momentum continues. Both the shipments and new orders indices remained in solid territory while the prices paid index moderated further, suggesting continued easing of upstream price pressures. The number of employees index increased for the third consecutive month, a positive sign for October’s NFP report. However, capital expenditure plans, while remaining in healthy territory, declined for the fifth consecutive month as trade tensions continue to weigh on business investment planning, a point emphasized in the September FOMC minutes released yesterday.

Initial jobless claims: Initial claims dropped 5k to 210k in the week ending October 13. The insured unemployment rate held at 1.2% for the week ending 6 October, unchanged from the previous week’s number. The impact from Hurricane Florence appears to have mostly waned from the Carolinas. However, claims data released next week may reflect an uptick following the impact of Hurricane Michael in the Florida panhandle. Over the medium term, continued declines in jobless claims and insured unemployment appear consistent with healthy labor market activity.

Existing home sales: 

We expect a 1.6% m-o-m decline in existing home sales to 5.26mn saar in September (Consensus: -0.9% to 5.29mn) from 5.34mn saar in August. Pending home sales, which tend to lead existing home sales, slowed in August and July and pose downside risk to September existing home sales. Slowing existing home sales suggest waning demand as affordability continues to deteriorate. Moreover, higher mortgage rates will likely continue to constrain supply via mortgage rate lock-in despite rising prices. We think real residential investment will remain a weak spot in the strong overall economy."