The Wall Street Journal
22 April 2010
Existing-home sales rose 6.8% in March.
Existing-home sales rose in March as the percentage of first-time home buyers continued to climb ahead of the expiration of a government tax credit program.
Separately, the number of U.S. workers filing new claims for jobless benefits decreased last week, but the levels still aren’t low enough to be consistent with an improving job market. Meanwhile, U.S. wholesale inflation rose by more than expected last month as food prices moved sharply higher, but the core measure that strips out volatile food and energy items barely increased.
Home resales were up slightly more than expected, climbing 6.8%, to a 5.35 million annual rate from a downwardly revised 5.01 million annual rate in February, the National Association of Realtors said Thursday. Analysts surveyed by Dow Jones Newswires had expected sales to rise to an annual rate of 5.25 million.
Housing inventory in March rose 1.5% to 3.58 million, representing an 8.0 month supply. That’s down from an 8.5 month supply in February, the Realtors said.
First time home buyers purchased 44% of all homes in March, up from 42% in February. The level of all cash sales was steady at 27%.
NAR Chief Economist Lawrence Yun credited the government’s tax credit program with driving sales higher, but said it would take months for the full effects of the program to be reflected in the data.
Jobless Claims Decline
The Labor Department said in its weekly report Thursday that initial claims for jobless benefits fell by 24,000 to 456,000 in the week ended April 17. The drop was right in line with the expectations of economists surveyed by Dow Jones Newswires.
The previous week’s level was revised downward to 480,000 from 484,000.
The decline in jobless claims comes after two prior weeks of unexpected surges in the figures which the U.S. Labor Department blamed on the Easter holiday and other seasonal factors. The department had said rising layoffs weren’t likely to blame for the increases, but nevertheless the elevated numbers still raised some concerns among outside experts.
The four-week moving average, which aims to smooth volatility in the data to help paint a better picture of the underlying trend, rose for the week ended April 17. The Labor Department said the four-week moving average went up by 2,750 to 460,250 from the previous week’s revised average of 457,500.
Total claims lasting more than one week, meanwhile, fell.
Jobless claims continue to remain stubbornly high even though the U.S. economy is growing and the Labor Department’s March report showed jobs were being created. That report found that nonfarm payrolls rose by 162,000, although some of that was due to temporary hiring for the 2010 Census. Overall, unemployment still remains at 9.7%.
Economists have generally agreed that it will still take time to see an improved labor market. That view was reiterated again on Monday by Federal Reserve Governor Elizabeth Duke, who said it will take “sustained, robust job growth for some time” to help repair the damage from the 8 million jobs that were lost in the past three years.
In the Labor Department’s Thursday report, the number of continuing claims–those drawn by workers for more than one week in the week ended April 10–declined by 40,000 to 4,646,000 from the preceding week’s revised level of 4,686,000.
The unemployment rate for workers with unemployment insurance for the week ended April 10 was 3.6%, a 0.1 percentage point decline from the prior week’s revised rate of 3.7%.
The largest increase in initial claims for the week ended April 10 occurred in New York due to layoffs in the transportation and service industries. California, Florida, Indiana, and Texas also saw increases in claims. The largest decreases occurred in Kentucky, Iowa, New Jersey, Nevada and Puerto Rico.
Wholesale Prices Jump
The producer price index for finished goods rose by a seasonally adjusted 0.7% on the month in March, the Labor Department said Thursday, after falling by 0.6% in February.
Core wholesale prices, however, barely moved. Excluding volatile energy and food prices, producer prices rose by just 0.1% last month, the same increase seen in February.
Economists polled by Dow Jones Newswires were expecting wholesale prices to rise 0.4% in March. Core producer prices were seen up 0.1%.
To aid an economy that is still recovering from a severe recession, the Federal Reserve has kept short-term interest rates near zero for more than a year, pointing to low inflation and high unemployment as the main factors behind its strategy.
Inflation has been slowing recently, particularly the price readings that strip out volatile food and energy items that are closely watched by the Fed. In March, core consumer prices moderated to an annual 1.1%, the lowest level since 1966.
The report Thursday showed that for the 12 months ended March 2010, the unadjusted producer price index rose by 6.0%, the largest increase since September 2008. However, the core producer price index rose just 0.9% over the past year.
On a monthly basis, which is adjusted for seasonality, food prices rose by 2.4% in March, the sharpest increase since 1984. The increase was led by higher fresh and dry vegetable prices, which jumped by 49.3%, the largest rise since 1994. The price of dry onions and cauliflowers more than doubled.
Energy prices rose by 0.7% in March, following a 2.9% drop in February.
The producer price report showed that prices of raw materials, known as crude goods, rose by 3.2% on the month in March. Intermediate goods prices increased by 0.6%.
Fed officials have begun to debate how and when to signal to markets that interest rate increases could be coming as the economy continues to grow. Worried that low rates may spur asset bubbles and inflation, Kansas City Fed President Thomas Hoenig voted against the central bank’s pledge to keep rates at a record low for an “extended period” at the last policy-meeting March 16.
But with core inflation slowing and the unemployment rate at 9.7%, nearly all Fed officials were in favor of maintaining that pledge last month. A few even noted that it was riskier to raise rates too soon rather than too late. The Fed is expected to keep the “extended period” commitment at its next meeting April 27-28.