Instant View: November existing home sales up, Philly Fed rebounds

Published December 20, 2012

| Reuters

Factory activity in the U.S. mid-Atlantic region accelerated in December, bouncing back from the previous month's slump as new orders picked up.

The Philadelphia Federal Reserve Bank said its business activity index rose to 8.1 from minus 10.7 in November, easily topping economists' expectations for minus 3, according to a Reuters poll.

New orders climbed to 10.7 from minus 4.6.

Any reading above zero indicates expansion in the region's manufacturing sector. The survey covers factories in eastern Pennsylvania, southern New Jersey and Delaware.

It is seen as one of the first monthly indicators of the health of U.S. manufacturing leading up to the national report by the Institute for Supply Management.

U.S. home resales rose sharply in November to their fastest pace in three years, a sign the recovery in the housing market is gaining steam.

The National Association of Realtors said on Thursday that existing home sales climbed 5.9 percent last month to a seasonally adjusted annual rate of 5.04 million units.

That was the fastest since November 2009, when a federal tax credit for home buyers was due to expire. Sales were well above the median forecast of a 4.87 million-unit rate in a Reuters poll.

COMMENTS:

ANDREW GRANTHAM, ECONOMIST, CIBC WORLD MARKETS, TORONTO

"Existing home sales in the U.S. easily surpassed expectations in November...While pending home sales and mortgage applications had pointed to a healthy increase, the sharp rise suggests that the uptrend in existing sales is not just continuing but also accelerating.

"The Philly Fed index also beat expectations...The jump more than made up for the sharp downturn in November, related to hurricane Sandy and uncertainties over the fiscal cliff.

"The two sets of better-than-expected figures could be a modest boost to stocks, although ongoing headlines over fiscal cliff negotiations could continue to be more important in shaping sentiment."

DAVID SLOAN, ECONOMIST, 4CAST LTD, NEW YORK

"It was pretty positive. You can't really argue about it. It seems like the weakness in the November data was a consequence of hurricane Sandy. The breakdown is positive with new orders turning above the headline, you have got employment positive, the work week turning positive, and six-month expectations stronger.

"It is a pretty unambiguously positive number, although it should be said it is not a number that suggests an exceptional pace of manufacturing growth but it is still a pretty encouraging number."

JOSEPH TREVISANI, CHIEF MARKET STRATEGIST, WORLDWIDE MARKETS, WOODCLIFF LAKE, NEW JERSEY

"Existing home sales have improved this year. Purchases are supported by the lowest mortgage rates on record. The housing market is considerably weaker than the statistics portray. Jobs, not interest rates, are the key to further improvement but those lower rates from the Fed are putting the dollar on the defensive."

(Americas Economics and Markets Desk; +1-646 223-6300)

URL

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