As predicted, the jobless claims report was the first one to show weakness related to Hurricane Florence. Jobless claims were 214,000 which was a 12,000 increase from the previous week. The 4 week moving average only increased 250 to 206,250. It was 1,000 higher than the consensus estimate.

Almost the entire reason for the increase was hurricane-related. Claims in North Carolina increased 8,000 to 10,209. Claims in South Carolina were up 1,900 to 3,362.

This means the hurricane won’t have as big of an economic impact as Hurricane Harvey had last year.

It won’t be a saving grace for auto sales. Lightweight auto sales in August 2018 were 16.596 million, while sales were 16.452 million in August 2017.

Sales won’t spike to 18.089 million like they did in September 2017. The negative impact on GDP growth from the hurricane probably won’t be enough to push it below 3%. If it does fall below 3%, it will be because of economic growth deceleration not the hurricane.

Jobless Claims – Q2 GDP Revised

The final Q2 GDP growth reading was upwardly revised to 4.3% from 4.2%, making a great quarter look slightly better. The price index and real consumer spending growth stayed at 3% and 3.8%.

Non-residential fixed investment growth was revised higher from 8.5% to 8.7%. This is an amazing growth rate. Residential investment growth was revised 0.3% lower to -1.4%.

Government spending growth increased 0.2% to 2.5%. Inventories, which already showed a sharp drag on Q2 GDP growth, were revised to show a slightly greater drag.

Inventories should be replenished in Q3 which is why I expect it to show above 3% growth even if the economy decelerated. Net exports weren’t revised much.

Jobless Claims – Kansas City Manufacturing Index Weakens Slightly

The Kansas City Fed manufacturing survey saw its composite index fall from 14 to 13.

As you can see from the chart below, it’s not as strong as it was earlier in the year. However, it’s still positive which means conditions are good.