US: Focus on jobless claims, import prices and Philly Fed survey - Nomura

Analysts at Nomura point out that the US initial claims rose 10k to 239k during the week ending 4 November. Much of the increase was likely driven by an uptick in Puerto Rico which was affected heavily by Hurricanes Irma and Maria.

Key Quotes

“The Labor Department reported that the ability to take claims has improved in Puerto Rico and they are now processing backlogged claims. The recent increase was likely a delayed reflection of backlogged claims in Puerto Rico. Further, the Labor Department also noted that claims taking procedures continue to be severely disrupted in the Virgin Islands. This region will continue to add to initial claims as recovery continues and backlogged claims get processed. However, these hurricane-driven spikes are likely transitory. We maintain our view that initial unemployment claims will gradually return to their previous downtrend considering the continued strength of the labor market.” 

“Import prices: The divergence between imported core consumer goods prices (excluding food, energy, and autos) and CPI core goods prices suggests that the recent weakness in CPI core goods price inflation may not attributable to an external shock. The core consumer goods import prices have stabilized in recent months, but core goods prices in CPI have been declining in recent months, suggesting that domestic factors may be weighing down inflation. Considering the weaker dollar, we expect steady increases in import prices. Higher oil prices will likely push up import prices as well.”

“Philly Fed survey: Consistent with our view for the Empire State survey, we forecast an elevated reading for the November Philly Fed survey of 24.0. Our forecasts reflect elevated manufacturing activity in recent months. Similar to the Empire State survey, this would be a slight pullback from the previous month but still highly elevated.”

“NAHB housing market index: After rebounding from a hurricane-related decline, we forecast a still-elevated reading of 67 for the November NAHB’s housing market index. Rising building material costs and labor shortages will likely remain a concern for home builders. However, given the continued shortage of single-family homes for sale, we expect home builders to remain optimistic overall.”