Week in Review: March 24, 2023

Economic Commentary

Existing home sales jumped 14.5% in February, the first increase in 13 months and fastest pace since July 2020. New home sales increased for the fifth consecutive month, up 1.1% in February. While new home sales have moved up from their cycle low last July, they remain subdued and are running below their longer-term trendline, with sales down 19.0% from a year ago. While lower mortgage rates in early 2023 likely incentivized potential homebuyers in both markets, prices of existing homes have come down relative to new homes, spurring a greater pickup in demand for existing homes.

According to S&P Global, US manufacturing activity edged up in March to a five-month high. Though it remained in contraction territory, the series benefitted from a renewed rise in production and a softer fall in new orders. Services activity rose to its fastest reading since April 2022, boosted by new orders which increased for the first time since last September.

Durable goods orders fell 1% in February, due to a decline in orders for civilian aircraft and new cars. Excluding transportation, durable goods orders were unchanged. On a year-over-year basis, orders were up 2.3%, marking the smallest increase since 2020, however, business investment rose for the second month in a row in a sign the industrial side of the economy is still growing.
Weekly jobless claims fell 1K to 191K, contrary to the consensus of a 6k increase. The four-week average of claims slipped by 250 to 196,250. This level is close to pre-pandemic and historic lows. The unexpected dip in claims suggests March could see another month of solid job growth.

Of Note