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DISOBEDIENT DATA: JOBLESS CLAIMS DIP, GOODS TRADE GAP HITS RECORD, PENDING HOME SALES SLIP

Investors began their Thursday with a naughty crew of economic indicators, most of which rudely disobeyed economists' predictions.

Last week, 206,000 U.S. workers joined the queue outside the unemployment office USJOB=ECI, marking a 6.4% drop from the previous week's upwardly revised 229,000.

That's 19,000 fewer than analysts were expecting.

But ironing out weekly volatility, the four-week moving average of initial claims is now essentially moving sideways at around 220,000.

"Although nothing in the data argues for lower rates, it does support the idea that the job market is holding up," says Chris Zaccarelli, chief investment officer at Northlight Asset Management. "We appear to be in a low-hire, low-fire environment which is unusual, but it also shows that the economy isn't falling off a cliff."

Ongoing jobless claims USJOBN=ECI, which are reported on a one-week lag, moved in the other direction, edging up 0.9% to 1.869 million, or 9,000 more than economists anticipated. This metric remains elevated, coming at a time of weak hiring and consumer survey data that suggests laid-off workers are finding it increasingly difficult to find a replacement gig.

Separately, the Commerce Department released its international trade report USTBAL=ECI for December.

It showed the difference in the value of goods and services imported to the U.S. and those exported abroad, widened by an eye-opening 32.6% to $70.3 billion. This follows November's whiplash-inducing 94.5% increase to the trade deficit, which marked the largest goods trade deficit surge in nearly 34 years.

Under the hood, exports fell by 1.7%, extending the prior month's 3.4% decline. But imports jumped 3.6%, standing on the shoulders of November's 4.2% spurt.

Imports, which account for the lion's share of the United States' total international trade, are a GDP detractor.

Bottom line, the continued rebound in imports and weak exports are likely to put a sizeable dent in Q4 GDP.

The report suggests "much weaker GDP growth ... now looks likely in Q4," writes Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. "We’re revising our forecast for headline growth down to 2%, from 3.5% previously."

Pivoting to the housing market, signed contracts for the pending sales of pre-owned U.S. homes USNAR=ECI unexpectedly softened by 0.8% in January, according to the National Association of Realtors (NAR).

The number adds salt in the wound of December's 7.4% plunge, and defied analyst expectations of a 1.3% rebound.

"Improving affordability conditions have yet to induce more buying activity," says Lawrence Yun, NAR's chief economist. "With mortgage rates nearing 6%, an additional 5.5 million households that could not qualify for a mortgage one year ago would qualify at today’s lower rates."

But for now, the Pending Home Sales index continues to wallow near the depths of the April 2020 pandemic shutdown nadir.

Next up, the Philly Fed business index USPFDB=ECI surprised to the upside by jumping 3.7 points to 16.3, moving in opposition to analyst expectations.

According to the Philadelphia Fed's press release, "general activity and new orders indexes remained somewhat elevated; however, the shipments index declined to a near-zero reading. The employment index suggests mostly steady employment overall but dipped into negative territory. Both price indexes continued to suggest overall price increases. Expectations for growth over the next six months were more widespread."

This echoes Monday's Empire State index, which also enjoyed its second straight month north of zero.

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

(Stephen Culp)

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