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Existing home prices fell in October, according to the S&P’s Case-Shiller index. The 10- and 20-city indices declined 1.1% and 1.2% respectively. This marks the second consecutive month of price declines.


Despite the fall, home prices improved on a year-ago basis. The 10-city index is down 3% from one year ago, an improvement from the 3.2% reported last month.


Of the 20 metropolitan areas surveyed, only one, Phoenix, reported appreciation in home prices, a 0.3% increase in prices. Atlanta and Detroit were hit hardest, seeing monthly declines of 5.0% and 3.3% respectively. Only two metro areas, Detroit and Washington, have prices above year ago level seeing appreciation of 2.5% and 1.3% respectively. Las Vegas has been hit the hardest this year with prices remaining 8.5% below their level one year ago.

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Led by strong private sector gains, construction spending rose 0.8% in October according to a Census Bureau report released this morning. The growth is stronger than September’s weak 0.2% but remains at relatively low levels.


Private construction led the gain, growing by 2.3%, its fastest rate since May. Private residential construction was the primary contributor to the growth, up 3.4% from September. Non-residential growth was strong as well, growing 1.3%. Public construction spending proved a drag on growth falling 1.8%.

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Manufacturing made strong progress in October, with the ISM’s manufacturing index rising from 51.5 to 51.7. Although the improvement in the overall index was modest, the details of the report were strong, indicating further improvement in coming months. Currently, the index is at its highest levels since May.



Despite only rising 0.2 points in October, movement within the survey’s components suggest a strong trend. Specifically, new orders picked up 1.9 points, rising to 54.2. In addition a 0.5 point decline in inventories put inventory accumulation at its neutral threshold of 50. The gap between new orders and inventories, a proxy for future production, more than doubled to 4.2 points.

Production returned to positive territory in October, reaching 52.4. The employment portion of the index gave up some of the outsized gain it experienced in September but remained strong at 52.1. The weak global economy continues to drag on growth, with new export orders falling farther into negative territory in October, reaching 48.0.

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The U.S. trade deficit widened by $1.9 billion in October, reaching $42.2 billion. The trade deficit has tracked in a narrow range, from $40 to $43 billion, since June. Both exports and imports fell in October, with the decline in exports outpacing the fall in imports. It is not surprising that both imports and exports fell in October, as Hurricane Sandy shut down many ports in the Northeast.



Exports fell 3.6% in October, reaching $180.5 billion, their lowest level since February. Imports fell in February as well, but by a more modest 2.1%, reaching $222.8 billion.

The real good’s deficit, which has a direct impact on GDP, shrank slightly in October to $46.2 billion. The European crisis has widened the U.S trade gap, as Europeans import fewer goods due to slowing economic activity.

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Industrial production rose by a strong 0.7% in October according to a Federal Reserve report released this morning. The growth follows a downward revision of September’s growth to -0.1% from 0.2%. October’s growth is well above the growth seen in recent months, excluding a 1.2% jump seen in July.

Manufacturing output rose by a solid 0.5% in October due primarily to a 3.1% growth in motor vehicle production. Excluding the auto sector manufacturing rose 0.3%, matching September’s growth.


A 2.3% increase in mining output contributed to overall industrial production growth in October. This follows a contraction of 0.5% in September. Utilities posted a 0.1% decline in October, not nearly as bad as the 2.0% decline reported in September.

Looking forward the solid increases in final sales and slower rate of inventory accumulation over the last quarter imply that manufacturing will remain strong through the rest of the year.

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