Regional factory data continues to trend much higher than government data. The Empire State Mfg. Survey matched its high last seen in Sept. 2014, and last beat in Oct. 2009. Employment, a bright spot in the report, indicated the strongest rate of hiring in over two years. The Philadelphia Fed Business Outlook survey was also exceptionally strong, and led by employment. The index reached a high that hasn’t been seen in the 48 years of this report’s data. However, according to the government’s Industrial Production report, the factory sector isn’t showing much life, rising just 0.3% in September following a –0.7% decline in August.  Manufacturing was disappointing at 0.1% vs. the consensus expectation for a 0.4% gain. 

Data out of the housing sector was mixed, pointing to a flat to slightly positive year-end for the housing sector. The Housing Market Index was up strongly, indicating an uptick in homebuilder optimism. However, Housing Starts and permits were weaker than expected, down -4.7% and -4.5% in the month, respectively. Single-family homes were a highlight in the report, highlighted by permits which rose 2.4% in the month and 9.3% Y/Y.  That suggests an improvement in supply as well as gains ahead for the residential investment component of GDP. Existing Home Sales posted their first monthly gain in four months, but were down slightly Y/Y.  Prices rose a little over 4% while supply remained constrained.  

Leading Indicators were pulled lower in September by a spike in jobless claims. Given the quick recovery of claims in October, this index is expected to see improvement as well. Excluding jobless claims related distortions, signals in the report were mixed, especially for the factory sector, but the trend remains positive. Jobless Claims have largely returned to pre-hurricane levels, though Florida remains slightly elevated.