According to American Chemistry Council (ACC) Weekly Chemistry & Economic Trends report on September 30, 2022, the number of new jobless claims fell by 16,000 to 193,000 during the week ending 24 September. Continued claims declined 29,000 from the previous week’s level to 1.347 million. The insured unemployment rate for the week ending September 17 was unchanged at 1.0%.
Consumer spending rebounded in August, up by 0.4%, in line with expectations. Strong gains in spending on services offset lower spending on nondurable goods (reflecting, in part, lower prices for gasoline). Personal income also rose, up 0.3%. This represents the aggregate spending power in the economy. The savings rate remained steady at 3.5%. Compared to a year ago, real (inflation-adjusted) consumer spending was up 1.8% while personal income was off 4.5% Y/Y (reflecting the removal of pandemic-related fiscal stimulus). The price index for personal consumption expenditures (PCE) rose at a 6.2% annual pace, lower than the 6.4% pace in July, but still elevated. Excluding the volatile food and energy components, the core PCE price index accelerated to a 4.9% annual pace, up from 4.7% in July. Because this is the Fed’s preferred inflation measure, the unexpected acceleration lays the foundation for additional Fed tightening.
Consumer Confident
The Conference Board Consumer Confidence Index® rose—up 4.4 points to 108.0—in September following a gain in August. Consumers’ assessment of current business conditions improved as did their assessment of the labor market with more saying jobs were “plentiful” and less saying they were “hard to get” in September. The expectations component, which is based on consumers’ short-term outlook for income, business and labor market conditions improved though it remains at a low-level indicating recession risk. Purchasing plans were mixed with increased intentions to buy appliances and cars but as mortgage rates increase and affordability decreases, plans to buy a home declined. Concerns about inflation moderated to their lowest level so far this year.
New home sales rose in August by 28.8%, a level just 0.1% below the August 2021 level. Sales were higher in all regions compared to July. The number of new homes available for sale at the end of August rose for a ninth consecutive month by 0.4%. At the current sales pace, the inventory of new homes represents an 8.1-month supply, a downturn from July when inventory was at the highest level since 2009.
New orders for durable goods edged down 0.2% in August from July. The slight decline was less than the 0.4% decline economists had forecasted. The decrease was largely due to the 18.5% drop in orders for nondefense aircraft, a possible reflection of the current state of U.S.-China relationship. Total transportation orders were down 1.1% in August from July. Excluding transportation, durables orders were up 0.2%. Total orders excluding defense were down 0.9% - suggesting that defense orders related to the war in Ukraine have provided some floor to total new orders. A proxy for business investment, “core” new orders – new orders minus civilian aircraft capital goods and defense capital goods – was up 1.3% in August.
The third and final estimate of the second quarter GDP was unrevised at -0.6% (SAAR). First quarter GDP was -1.6% (SAAR) and also unrevised. On the upside, personal consumption was higher than previously estimated and increased by 2%, making a positive contribution. Consumers spent more on services and less on goods than in the previous quarter, as the post-pandemic adjustment continues to unfold. The gross investment was lower than previously estimated and fell 14.1%. Higher borrowing costs impacted investment while net exports narrowed to -$1,035.6 billion and made a positive contribution. The change in inventories was up to $145.4 billion, less than the $257.4 billion in the first quarter. In summary, the annual revisions to the GDP data did not change the current picture of the growth in the economy through Q2.
Chicago Purchasing Managers Index
An early look into manufacturing activity for September, the Chicago PMI fell 6.5 points to 45.7, its lowest level in more than two years, and well below expectations. The below-50 reading indicates that manufacturing activity contracted in the Chicago area during September. A number of measures contracted, including new orders which fell for a fourth month.
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