U.S. Initial Claims, May Philly Fed, April Housing Starts and Permits - Mixed data gives no clear signals of strength or weakness
The latest data is mixed, initial claims in line with expectations and showing signs of stabilizing at a still low level. May’s Philly Fed manufacturing survey is weaker than expected but with positive 6-month expectations, both on activity and prices. April housing starts and permits are on the firm side of expectations, but flattered by gains in the volatile multiples sector.
Initial claims at 209k are little changed from last week’s 212k and back on trend after two very low figures below 200k two and three weeks ago. The closure of Spirit Airlines which employed 17k people may however have provided a temporary lift.
This week’s data covers the survey week for May’s non-farm payroll and the 4-week average of 202.5k is down from 211k in April’s survey week, thus hinting at upside risks to the payroll.
Continued claims at 1.782m from 1.776m have seen two straight modest gains after three straight declines, providing a similar message to initial claims. The 4-week average continues to decline. Continued claims cover the week before initial claims so it will be next week’s continued claims that will cover the payroll survey week.
May’s Philly Fed manufacturing index of -0.4 down from a strong 26.7 in April. It is unclear whether this is a sign of the Middle East conflict starting to have adverse effects or simply volatility. New orders at -1.7 from 33.0 also tuned negative but employment at -2.8 from -5.1 was a little less negative.
Even price indices slipped, paid to 47.9 from 59.3 and received to 26.3 from 33.5, though both remain above February and March levels. April’s levels did not match the tariff-inflated peaks of 2025.
6-month expectations on activity at 53.2 from 40.8 are the highest since June 2021. With 6-month price expectations accelerating it does not appear that the optimism is based on an expected end to the Middle East conflict. 6-month prices paid rose to 70.0 fr5om 50.2 and 6-month prices received rise to 60.5 from 50.2, through again both of these are still lower than their highs of 2025.
April housing starts, down 2.8% to 1.465m after a 12.0% March increase, and April permits, up 5.8% to 1.442m after a 11.5% March decline are both stronger than expected.
Detail however shows single starts down by 9.0% after a 10.7% March increase and single permits down by 2.6% after a 3.7% March decline, reaching their lowest level since August. The volatile multiples series saw starts up by 10.3% after a 14.7% March rise and permits up by 21.8% after a 23.4% March decline.
Trend has little direction for permits which suggests a recent improvement in starts trend is unlikely to extend much further, particularly given the fading of Fed easing hopes.
