Building permits in the U.S. tumbled 11.2% from a month earlier to a seasonally adjusted annual rate of 1.342 million in November 2022, well below market expectations of 1.485 million. Building permits which are a proxy for future construction, have been falling as soaring prices and rising mortgage rates have hit demand and activity, and marked the lowest level since June 2020.
Existing home sales in the U.S. slumped to a two and a half year low, plunging 7.7% to a seasonally adjusted annual rate of 4.09 million in November 2022, much worse than market expectations of a 5.4% drop.
This is the tenth consecutive month of falls in home sales, which is the lowest level since May 2020, as the Fed’s aggressive interest rate hiking cycle is having a huge impact on housing. Despite demand being down, supply remains tight, keeping home prices elevated, albeit the pace of increases is slowing.
The U.S. Bureau of Economic Analysis released on the Thursday GDP growth rate data, showing the U.S. economy grew at an annualized 3.2% on quarter in Q3 2022, better than 2.9% in the second estimate, and rebounding from two straight quarters of contraction.
Initial claims for state unemployment benefits rose by 2,000 to 216,000 in the week ending 17th of December, below market expectations of 220,000 and extending signals of a stubbornly tight labor market, adding to hawkish projections for the Federal Reserve along with the upward revision to the US GDP.
Labor market resilience is keeping the U.S. central bank on its aggressive policy tightening campaign, with the Fed last week projecting at least an additional 75 basis points of increases in borrowing costs by the end of 2023. Companies are likely to stop hiring before starting layoffs as employers have been struggling to find labor during the COVID-19 pandemic.
Overall, equity markets suffered its worst year since the Global Financial Crisis, crushed under the boot of rising interest rates, supply chain disruptions and ongoing global energy crisis. These joined forces generated the greatest inflation shock over the past four decades, forcing the central bank to aggressively hike rates.
