Week of November 1–November 5, 2010

Produced by NAR Research

Weekly Economic ForecastIndicator Updated

ForecastPast Week’s Forecast

Directional Shift

GDP 2010 Q4: 2.6% 2.6% ↔

GDP 2011 Q1: 2.5% 2.5% ↔

GDP 2011 Q2: 2.3% 2.2% ↑

Unemployment rate by mid-2011:

9.4% 9.5% ↓

Average 30-year fixed mortgage rate by mid-2011:

4.8% 4.9% ↓

NAR's monthly official forecast as of November 5

Produced by NAR Research

Monday, 11/01/10• Personal income and outlays

figures for September were released this morning. In that report, disposable personal incomes eased slightly, 0.2%, after gaining 0.4% in August.

• Consumer spending decelerated to a gain of 0.2% in September, after a 0.5% jump in August. Sales of durable goods led consumer spending by growing 0.7%. The PCE inflation index, a measure of growth in prices similar to the consumer price index, rose just 0.1%.

• The ISM manufacturing index gained in October, up a solid 2.5 points to 56.9. Orders, production, and employment all rose, but a 7.8 point surge in new orders pushed the index further above the critical 50 mark, an indication that this sector is expanding. Employment rose 1.2 points to 57.7.

Economic Updates

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Monday, 11/01/10 (cont’d)• Construction spending rose

0.5% from August to September. Residential construction rose 1.8% from August, while non-residential slipped 1.6%. Public sector construction rose 1.3% from August to September.

• Income growth remains sluggish, but demand for goods was solid. The improved demand for manufactured goods and residential home construction are positive signs for the labor market.

• Echoing this trend was the upward movement of employment in the manufacturing sector.

• Employment and confidence are critical to a sustained economic recovery. While today’s reading is not an overwhelming sign, it is a move in the right direction.

Economic Updates

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Tuesday, 11/02/10• No data was released today.

Economic Updates

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Wednesday, 11/03/10 • Mortgage purchase applications were up

1.4 percent for the week ending October 29th. Purchase applications do not take into consideration cash buyers who according to the August REALTORS® Confidence Index make up as much as 28 percent of transactions.

• Mortgage purchase applications were down 28.5 percent from the same week a year ago.

• Refinances, which made up 81.3 percent of mortgage activity, fell 6.4 percent as mortgage rates inched up to 4.28 percent on a 30-year fixed mortgage.

• Private sector employment grew 43,000 in October, slightly more than expected, according to the ADP national employment report. While growth is good, more jobs need to be created to bring down unemployment (see this brief commentary for more details). Friday’s data from the Labor Department should provide a clearer picture on October’s employment numbers.

Economic Updates

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Thursday, 11/04/10 • Last week’s initial jobless claims data

suggest to continued swings in the labor market. The initial claims jumped 20,000 to 457,000 after two weeks of declines. The 4-week moving average also moved up 2,000 claims to 456,000. Falling below 400,000 would indicate improvement in the job market. Continued claims fell, though, by 42,000 to the lowest level since November 2008. The largest increase in initial claims came from California due to layoffs in the forestry, fishing and agriculture industries, while the largest decrease was in Kentucky and Florida. Jobs report for October is coming out tomorrow.

• In the productivity and costs report also released today, productivity in the third quarter is showing to be rebounding due to output growth and slight decrease in per unit labor costs. The improvement in productivity mostly reflected growth in nonfarm business sector, but productivity in manufacturing also picked up slightly.  

Economic Updates

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Friday, 11/05/10 • In October, 151,000 jobs were

added. Since December 2009, payroll employment has risen by 874,000.

• Temporary help services add 35,000 jobs in October. Since, September of 2009, temporary help has added 451,000 jobs. Companies often hire temporary help before they add permanent employment.

• Health care, hospitality, mining and retail employment, including auto dealerships and appliance stores also saw gains in employment in October.

• The unemployment rate is unchanged at 9.6 percent.

• Pending Home Sales numbers were released today. For the press release, please click here >

Economic Updates

Produced by NAR Research