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Jobless Claims & Housing Starts Both Improve

September 17th, 2009 Michael McDonough

August housing starts rose 1.5% to 0.598mn, compared to a consensus estimate of 0.600mn.  Looking further into the details, single-family starts are down -3.0%, while multi-unit homes grew by +25.5%.In August permits rose by 2.7%, to 579K. July’s permits were revised to 564K from 560K. Going forward there could be some downside risks to this data due to the expiration of the government’s first time home buyer tax rebate in November.  What this means is that according to the NAHB, “July was probably the last month in which to get homes permitted and started in time for customers to take advantage of the incentive.”  However, there have been some discussions over extending the program,  which could negate some if not all of these effects.

Initial claims fall 12K to 545K finishing much better than the consensus forecast of 575K. The 4wk average of new claims fell 8,750 to 563,000.  Continuing claims rose by 129,000 to a seasonally adjusted 6.23mn.  initial claims should continue to improve over the months ahead, but remain well above comfortable levels, and will continue to adversely impact the monthly payroll number.  In fact using a simple regression initial claims would still indicated a monthly decline in payrolls of roughly -500K.  But, recently this regression has been exaggerating the actual impact.


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