Philadelphia Feeling: Federal Reserve Bank of Philadelphia Business Outlook Survey October 2011

The latest release of the Federal Reserve Bank of Philadelphia Business Outlook Survey (BOS) for October indicated a notable improvement in the regions manufacturing activity with the current activity index jumping to a level of 8.7 while the future activity index also improved to a level of 27.2.

While most component measures turned around in October, it's important to note that most measures still signal notable weakness for manufacturing activity... clearly, more data is needed in order to get a more complete sense of how the economy is trending.

The following chart shows the current and future activity indexes both with their corresponding 3-month moving averages. The red line marks the threshold between contraction and expansion for these diffusion indexes.

Extended Unemployment: Initial, Continued and Extended Unemployment Claims October 20 2011

Today’s jobless claims report showed an decline to both initial and continued unemployment claims as a slight rising trend was called into question for initial claims.

Seasonally adjusted “initial” unemployment declined 6,000 to 403,000 claims from last week’s revised 409,000 claims while seasonally adjusted “continued” claims increased by 25,000 resulting in an “insured” unemployment rate of 2.9%.

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.

Currently there are some 3.48 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.11 million people that are currently counted as receiving traditional continued unemployment benefits, there are 6.59 million people on state and federal unemployment rolls.

New Residential Construction Report: September 2011

Today’s New Residential Construction Report showed that in September, single family permits declined while single family starts increased from August with both measures continuing to show tepid results when compared on a year-over-year basis.

Single family housing permits, the most leading of indicators, declined 0.2% from last month to 417K single family units (SAAR), increasing 3.47% above the level seen in September 2010 but remaining an astonishing 76.81% below the peak in September 2005.

Single family housing starts increased 1.7% to 425K units (SAAR), but dropped 4.92% below the level seen in September 2010 and a stunning 76.69% below the peak set in early 2006.

With the substantial headwinds of elevated unemployment, epic levels of foreclosure and delinquency, mounting bankruptcies, contracting consumer credit, and falling real wages, an overhang of inventory and still falling home prices, the environment for “organic” home sales remains weak and likely very fragile.