Sunday, November 27, 2022

October’s durable goods and new home sales

There were just two widely watched economic reports released this week: the Advance Report on Durable Goods for October and the October report on new home sales, both from the Census bureau. The week also saw the release of the Chicago Fed National Activity Index (CFNAI) for October, a weighted composite index of 85 different economic metrics, which fell to –0.05 in October from +0.17 in September, which was revised up from the +0.10 reading reported for September last month....at the same time, the more often cited 3 month average of the CFNAI slipped to +0.09 in October, down from a revised +0.19 in September, which still indicates that national economic activity has been above the historical trend over those recent months, as would any positive index number....meanwhile, the Richmond Fed Survey of Manufacturing Activity for November, covering an area that includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, reported its broadest composite index remained negative but edged up from −10 in October to −9 in November, which still suggests an ongoing contraction of that region's manufacturing...

October Durable Goods: New Orders Up 1.0%, Shipments Up 0.4%, Inventories Up 0.2%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for October (pdf) from the Census Bureau reported that the value of the widely followed new orders for manufactured durable goods increased by $2.8 billion or 1.0 percent to $277.4 billion in October, the seventh increase in eight months, after the value of September's new orders was revised from the $274.7 billion reported a month ago to $274.6 billion, which now indicates a 0.3% increase from August, rather than the 0.4% increase previously reported...,year to date new orders are still running 10.9% above those of 2021, same as the year to date increase we saw in this report last month.....

As usual, the volatile monthly change in the value of new orders for transportation equipment led October's new orders increase, as new transportation equipment orders rose $2.0 billion or 2.1 percent to $97.8 billion, on a 7.4% increase to $19,816 million in new orders for commercial aircraft and a 21.7% increase to $5,424 million in new orders for defense aircraft....excluding orders for transportation equipment, the value of other new orders rose 0.5%, while excluding just new orders for defense equipment, new orders increased 0.8%....meanwhile, the value of new orders for non-defense capital goods less aircraft, a proxy for equipment investment, rose by $530 million or 0.7% to $75,323 million, after falling by a downwardly revised 0.8% in September...

At the same time, the seasonally adjusted value of October's shipments of durable goods, which will be included as inputs into various components of 4th quarter GDP after adjusting for any changes in prices, increased by $1.1 billion or 0.4 percent to $275.4 billion, the seventeenth increase in eighteen months, after the value of September shipments was revised from $274.2 billion to $274.3 billion, still up 0.3% from August...a $0.5 billion or 1.3 percent increase to $38.9 billion in the value of shipments of machinery, which rose for the nineteenth time in twenty months, led the October increase, while the value of shipments of transportation equipment rose $0.3 billion or 0.3% to $90,871 million on a 1.0% increase in the value of shipments of commercial aircraft.....meanwhile, the value of shipments of nondefense capital goods less aircraft rose 1.3% to $75,019 million, after the value of September capital goods shipments was revised from $73,778 million to $74,036 million, still a 0.1% decrease from August..

Meanwhile, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the 21st month in a row, increasing by $0.9 billion or 0.2 percent to $489.5 billion, after the value of September's inventories were revised from $488.7 billion to $488.64 billion, still 0.2% higher than the prior month...an increase in the value of inventories of machinery, up twenty-four consecutive months, led the October inventory increase, rising $0.9 billion or 1.1 percent to $86.6 billion, while the value of inventories of transportation equipment fell 0.2% to $156.8 billion...

Finally, the value of unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but volatile new orders, rose for the 26th consecutive month, increasing by $$7.0 billion or 0.6 percent to $1,144.3 billion, after the value of September’s unfilled orders was revised from $1,137.5 billion to $1,137.3 billion, still a 0.5% increase from August....a $6.9 billion or 1.0 percent increase to $671.1 billion in unfilled orders for transportation equipment was responsible for the October increase, while unfilled orders excluding transportation equipment were up just $106 million, or statistically unchanged at $473,156 million....compared to a year earlier, the unfilled order book for durable goods is 7.2% above the level of last October, with the value of unfilled orders for transportation equipment 9.8% above their year ago level, largely due to a 14.2% increase in the value of the backlog of orders for commercial aircraft......

New Home Sales Reported Higher in October After Prior Months Revised Lower; Median Sales Price at $493,000, an All Time High

The Census report on New Residential Sales for October (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 632,000 homes annually, which was 7.5 percent (±20.8 percent)* above the revised annual rate of 588,000 new single family home sales in September, but 5.8 percent (±19.6 percent)* below the estimated annual rate that new homes were selling at in October of last year....the asterisks indicate that based on their small sampling, Census could not be certain whether October new home sales rose or fell from those of September, or even from October of last year, with the figures in parenthesis representing the 90% confidence range for reported data in this report, which has the largest margin of error and is subject to the largest revisions of any census construction series....with this report; sales of new single family homes in September were revised from the annual rate of 603,000 reported last month down to a 588,000 annual rate, while home sales in August, initially reported at an annual rate of 685,000 and revised down to a 677,000 a year rate last month, were revised to a 661,000 a year rate with this report, and while July's home sale rate, initially reported at an annual rate of 511,000 three months ago and revised from a 532,000 a year rate to a 534,000 a year rate last month, were revised but remained at a 534,000 annual rate with this release...

The annual rates of sales reported here were seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which indicated that approximately 48,000 new single family homes sold in October, up from the 47,000 estimated new homes that sold in September but down from the 51,000 homes that sold in October a year ago.....the raw numbers from Census field agents further estimated that the median sales price of new houses sold in October was a record high $493,000, up from the revised median sale price of $455,700 in September and up from the median home sales price of $427,300 in October a year ago, while the average new home sales price in October was $544,000, up from the $516,400 average sales price in September, and up from the average sales price of $487,700 in October a year ago....a seasonally adjusted estimate of 470,000 new single family houses remained for sale at the end of October, which represents a 8.9 month supply at the October sales rate, down from the revised 9.4 months of new home supply in September...for graphs and additional commentary on this report, see the following posts by Bill McBride at Calculated Risk: New Home Sales Increase to 633,000 Annual Rate in October and New Home Sales Increased in October; Completed Inventory Increased. which in turn links to his thorough coverage of this report in his real estate newsletter

 

 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)  

No comments:

Post a Comment