In this morning’s data, Housing Starts were 1,277,000 in May, less than expected and a -5.5% decrease from the previous month. Building Permits were also less than expected at 1,386,000 in May, which is a -3.8% decrease from the previous month.
Also announced this morning Initial Jobless Claims were 238,000 for the week ending June 15th, slightly higher than expected and 5,000 less than the revised figure from the previous week. Continuing Claims were 1,828,000 for the week ending June 8th, more than expected and 15,000 more than the previous week’s revised figure.
Overall, a cooling in housing data as both starts and permits decreased in the month. As consumers are becoming stretched amidst sticky inflation, home improvement projects have waned, and home builders appear to be more cautious. While the housing market is only a small part of GDP, its activities feed into other areas in the economy. Also, initial claims were slightly higher than the previous week, and remain elevated from the low 200k level earlier this year. The labor market has become more balanced. How the Federal Reserve considers its policy amidst a more balanced labor market and cooling housing data that may feed further into the economy will be key for the markets in the coming months.
In all, the 10-year US Treasury yield initially ticked lower following the report but is now slightly higher and equity futures are mixed as we head into the market open.
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