Daily Economic Update

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update, highlighting jobless claims and the ISM non-manufacturing index, is after the jump.

• Very positive news came today from the new jobless claims report, with claims falling another 20,000 following the 25,000 decline last week. Currently at 368,000, the number of new claims is well below the 400,000 mark which suggests strong job gains.
• The four-week average is also down to 388,500, and this is the first time it has fallen below 400,000 since the economic recovery. Continuing claims fell as well, down 59,000.
• There had been 984,000 net new job additions in the past 12 months to January. Assuming that jobless claims continue to trend down, NAR expects about 1.5 to 2 million net new jobs in the next 12 months. Tomorrow’s employment report will provide an update for February.
• Separately, nonfarm productivity was up last quarter, 2.6 percent, while unit labor costs were slightly down, -0.6 percent. This suggests that productivity and labor cost numbers have helped businesses as they get more output per worker without an increase in the labor force; however the pressure will lead to new job creations as companies are forced to maintain output and increase revenue.
• Finally, the ISM non-manufacturing index, which surveys month-to-month changes in volume for businesses, suggested another positive development for the economy. Activity continued at an accelerated pace in February raising the headline composite index to 59.7. The reading is above 50, suggesting improvement. The index for orders suggests there is a strong demand and backlog orders are mounting.