LIVE MARKETS-Winter's bone: Lowest jobless claims this year, weakest new home sales since 2022, (and more)

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WINTER'S BONE: LOWEST JOBLESS CLAIMS THIS YEAR, WEAKEST NEW HOME SALES SINCE 2022, (AND MORE)

All but lost in the fog of war, a spate of economic reports on Thursday had fodder for optimists (low and steady jobless claims, accelerating East Coast factory activity) and pessimists (lowest new home sales in years, weakening leading indicators).

Last week, 205,000 U.S. workers joined the queue outside the unemployment office USJOB=ECI, marking an unexpected 3.8% decrease from the previous week's 213,000 initial claims, and landing 10,000 shy of the 215,000 analyst estimate.

It was the lowest initial claims print so far this year.

Ironing out weekly volatility, the four-week moving average of initial claims is essentially moving sideways, coasting along the lower end of the range associated with healthy labor market churn.

"The latest jobless claims figures are consistent with our view that while labor-market conditions have stabilized and layoffs appear to remain low, the US/Israel war with Iran has made the no-hire, no-fire labor market more vulnerable," writes Nancy Vanden Houten, lead economist at Oxford Economics. "We think downside risks to the labor market leave the Fed on track to lower rates twice this year with the first cut coming in June."

Ongoing jobless claims USJOBN=ECI, reported on a one-week lag, unexpectedly increased by 0.5% to 1.857 million.

This metric remains elevated, echoing consumer survey data that suggests laid-off workers are finding it increasingly difficult to find a replacement gig.

The sales of freshly constructed single-family U.S. homes USHNS=ECI plummeted by 17.6% in January to 587,000 units at a seasonally adjusted annualized rate (SAAR), according to the Commerce Department.

That's the lowest level since July 2022, and landed 18.5% shy of consensus, which called for 720,000 units SAAR.

Adding salt to the wound, the drop follows downwardly revised December data, which now shows a drop of 6.8% compared with the originally reported 1.7% decline.

As a result, monthly supply surged.

At January's rate of new home sales, it would take 9.7 months to sell every unit on the market, up from 8.0 months in December. That's the loosest months-supply reading since October 2022.

The decline was largely attributable to a spate of severe winter weather, but not entirely.

"Snowstorms in late January likely were the main driver of the sharp decline in new home sales," says Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. "But the underlying picture is weak too; mortgage rates are still too high to make a home purchase affordable for many households, and consumers' confidence is low."

The Commerce Department's report can be tossed atop a growing stack of evidence (weakening building permits, sour homebuilder sentiment, etc) that the new-build segment of the housing market faces challenges, as affordability is strained by still-elevated borrowing rates, rising materials costs and mounting economic uncertainties.

Turning to manufacturing, the Philly Fed business index USPFDB=ECI surprised to the upside by accelerating 1.8 points to 18.1. Economists predicted a deceleration to 10.0 this month from 16.3 in February.

Under the surface, "the new orders index moved down but remained positive, and the shipments index moved higher," according to the Philadelphia Fed's press release. "The employment index returned to positive territory but continued to suggest mostly steady employment overall."

The release goes on to say that the survey's price indexes rose this month after last month's decline.

The sunny Philly Fed report stands in sharp contrast to the New York Fed's cloudy Empire State index released on Monday, which showed New York State factory activity has unexpectedly dipped into contraction.

Positive Philly Fed/Empire State numbers indicate monthly growth, while negative prints signify contraction.

Finally, the Conference Board's (CB) Leading Economic Index (LEI) USLEAD=ECI posted a 0.1% decline in January, all but erasing the prior two months' gains - the first gains since February 2022.

The index is an amalgamation of 10 forward-looking economic indicators, including initial jobless claims, ISM new orders, building permits, yield spreads and S&P 500 price performance, among others.

Noting that the index does not yet reflect the war on Iran, Justyna Zabinska-La Monica, CB's senior manager of Business Cycle Indicators, says retreating consumer expectations and softening building permits were in part responsible for the dip.

"The topline LEI continues to signal headwinds to economic activity," she writes, adding that CB has revised its 2026 GDP estimate down by 0.1 ppt to an even 2.0%, weaker than 2025.

(Stephen Culp)

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