Factory output increased in October for the first time in three months as producers turned out more construction materials and motor vehicles. The 0.4% advance at manufacturers exceeded the median forecast and followed a 0.1% drop in September, figures from the Federal Reserve showed Tuesday. Total industrial production unexpectedly dropped 0.2% for a second month as warm weather reduced electricity demand and the oil industry continued to cut back.
On Wednesday Housing Starts and Building Permits figures were released. New-home building declined more than projected in October, led by a slump in apartment construction and showing fitful progress in residential real estate. Residential starts dropped 11 percent to a 1.06 million annualized rate, the slowest since March, from a revised 1.19 million pace the prior month, a Commerce Department report showed Wednesday. The median forecast called for 1.16 million. The most construction permits for single-family homes since 2007 indicates ground-breaking will rebound in coming months.
Permits, a proxy of future construction, increased 4.1% to a 1.15 million annualized rate. They were led by an increase in applications for single-family homes, which climbed to a 711,000 pace, the strongest since December 2007.The drop in starts last month was primarily due to a 25.1 percent slump in work on multifamily homes, the biggest drop since August 2014. Data on these projects, which have led housing starts in recent years, tend to be volatile.
However, the focus of the session was on FOMC Meeting Minutes. A large majority of Federal Reserve officials were open to a rate hike in December, according to the minutes of the U.S. central bank's October meeting released on Wednesday. "Most participants" anticipated that the conditions for beginning to raise interest rates "could well be met by the time of the next meeting," the minutes said.
Fed officials signaled in their October statement, for the first time, that they would contemplate a rate hike at their next meeting, set for Dec. 15-16. A majority of Fed officials said this didn't mean a rate hike in December was automatic and that it left their options open, but a minority of doves on the committee thought this could be misinterpreted as signaling too strongly the expectation that rates would be increased at the next meeting.
Thursday brought Unemployment Claims and Philly Fed Manufacturing Index figures. In the week ending November 14, the advance figure for seasonally adjusted initial claims was 271,000, a decrease of 5,000 from the previous week's unrevised level of 276,000. This was in line with market forecasts. The 4-week moving average was 270,750, an increase of 3,000 from the previous week's unrevised average of 267,750.
Separate report, on Philly Fed Manufacturing Index showed that the diffusion index for current activity edged higher this month, from -4.5 to 1.9, its first positive reading in three months, and above expected incline to 0.1. The indexes for current new orders and shipments approached zero this month, increasing 7 points and 4 points, respectively. Both indexes remained negative, however, suggesting continued weakness.
Next week markets will be looking at:
Existing Home Sales (Monday 16:00)
Prelim GDP (Tuesday 14:30)
CB Consumer Confidence (Tuesday 16:00)
Durable Goods Orders (Wednesday 14:30)
Unemployment Claims (Wednesday 14:30)
New Home Sales (Wednesday 16:00)
