Macro Briefing: 24 October 2024

US existing home sales fell to a 14-year low in September. “The factors that would drive higher home sales —- such as mortgage rates meaningfully lower now compared to one year ago, inventory beginning to increase and, of course, jobs continuously being added to the economy —- and yet home sales are stuck at low levels,” says Lawrence Yun, the chief economist at the National Association of Realtors. In sharp contrast, sales of new homes has been trending higher in recent years.

The Fed Beige Book suggests tepid economic conditions prevail for the US. Nine of 12 regional district banks report flat or slightly lower activity. “On balance, economic activity was little changed in nearly all Districts since early September, though two Districts reported modest growth,” the Fed reports.

Next week’s US third-quarter GDP report from the government is expected to show that economic growth accelerated compared with Q2, according to a revised nowcast published by TMC Research. The point estimate indicates output grew 3.9% in the July-through-September period, substantially faster vs. Q2’s 3.0% increase.

Business inflation year-ahead expectations “remained relatively unchanged at 2.2%, on average,” reports the Atlanta Fed in its monthly survey of companies. “Sales levels and profit margins ‘compared to normal’ increased. Year-over-year unit cost growth remained relatively unchanged at 2.6 percent, on average.”

Boeing factor workers rejected the company’s latest contract offer and extend strike that started six weeks ago. Of votes case, 64% of members of the International Association of Machinists and Aerospace Workers voted against the proposal.

One of the world’s largest investors says it’s “time to be a little bit cautious” on the stock market. Norges Bank Investment Management (NBIM), which manages Norway’s $1.8 trillion sovereign wealth fund, predicts that equity market risk is tilted to the downside. “The fund that we run has doubled in size over the last five years. Our equity portfolio has returned more than 100%. So, I think it is a time of being a little bit cautious,” says the fund’s deputy CEO.

Eurozone business activity continues to stagnate in October, according to PMI survey data. “The eurozone is stuck in a bit of a rut, with the economy contracting marginally for the second month running,” says Cyrus de la Rubia, chief cconomist at Hamburg Commercial Bank. The HCOB Flash Eurozone Composite PMI Output Index, a GDP proxy for the currency bloc, was slightly below the neutral 50 mark for this month’s flash estimate, nearly matching September’s below-50 level.