Aug New Home sales, a measure of contract signings now 4 months removed from the home buying tax credit, was 7k units below expectations at 288k annualized but the prior month was revised up by 12k to 288k. The level is just a touch off the May level of 282k which was the lowest since at least 1963. The absolute # of homes for sale fell by 3k to 206k, the lowest since 1968 but because sales remain anemic, months supply fell only to 8.6 from 8.7 and vs the long term average of 6.2. The West saw a 54% m/o/m rise in sales to the highest since April but in July it had fallen 58% from April. The tax credit wrecks havoc on any concept of long term business planning as its no more than a drug high followed by bad withdrawal. The median price fell 1.2% y/o/y to $204,700, the cheapest since Dec 2003.

Aug Durable Goods headline was slightly below expectations and fell by 1.3% (led by 40.2% drop in non defense aircraft) but ex transport orders were stronger than forecasted with a 2% gain vs consensus of 1% and the July figure was revised higher by a full % pt. Non defense capital goods ex aircraft rose 4.1% and July was revised higher. Vehicle/parts orders fell by 4.4% but were more than offset by gains in computers/electronics, electrical equipment, machinery, primary and fabricated metals. Because shipments fell by 1.5% and inventories rose by .4%, the inventory to sales ratio rose to 1.58 from 1.55. Bottom line, the better than expected data is great to see and hopefully an extension of businesses using healthier balance sheets to invest but the trend still has been lumpy as we haven’t seen 3 months in a row of core cap ex gains since early ’07. A permanent extension of R&D tax expensing if passed will definitely help.

Category: MacroNotes

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

One Response to “Economic data”

  1. “The tax credit wrecks havoc on any concept of long term business planning as its no more than a drug high followed by bad withdrawal….. A permanent extension of R&D tax expensing if passed will definitely help.”

    On one had a tax credit creates “high”or what I would prefer to call malinvestment, in the housing market but on the other hand you feel that a tax credit for R&D would be helpful. So within the next year, companies are supposed to (in the wake of a massive consumer deleveraging/govt delevaging (?)) come to grips with how they should increase R&D over 1 YEAR(?) to help create assets for future benefit for many years?

    Hmmmmm. Sounds to me like the tax credit will certainly help boost the economy, and earnings in the short term, which will allow CEO’s to dump even more shares while leaving the Caesars Palace (aka the US market) holding the bag.