A Good Start: February 15 – 19

Retailers, manufacturers, and real estate agents all reported having a good start to 2021. Here are the five things we learned from U.S. economic data released during the week ending February 19.

Armed with economic stimulus checks, consumers went shopping. The Census Bureau indicated retail and food services sales surged 5.3 percent in January to a seasonally adjusted $568.2 million. This was 7.4 percent ahead of the year-ago sales pace. Auto sales gained 3.1 percent, while gas stations reported a 4.0 percent rise. Net of both, core retail sales were up a strong 6.1 percent for the month and 7.6 percent from a year earlier. Sales advanced in every major retail sector. Among the highlights were gains for department stores (+23.5 percent), electronic/appliance stores (+14.7 percent), furniture retailers (+12.0 percent), sporting goods/hobby stores (+8.0 percent), restaurants/bars (+6.9 percent), and apparel retailers.

Manufacturing output rose again in January. The Federal Reserve estimates manufacturing output grew by a seasonally adjusted 1.0 percent during the month. Durable goods production jumped 0.9 percent while that of nondurables increased 1.2 percent. Holding back the former was a semiconductor shortage that stymied automobile production. Even with four consecutive gains, manufacturing output remained 1.0 percent below year-ago levels. Overall industrial production advanced 0.9 percent during the month but was 1.8 percent under January 2020 levels. Mining output increased 2.3 percent in January while utility output fell 1.2 percent.

Sales of previously owned homes remained near record-levels as 2021 started. Existing home sales edged up 0.6 percent in January to a seasonally adjusted annualized rate of 6.69 million units. The National Association of Realtors measure was up a startling 23.7 percent from a year earlier. Sales advanced during the month in the South (+3.2 percent) and Midwest (+1.9 percent) and slowed in the West (-4.4 percent) and Northeast (-2.2 percent). All four Census regions enjoyed year-to-year gains greater than 20 percent. Continuing to hold back sales from even larger increases was a lack of inventory. There were 1.040 million homes for sale (a mere 1.9 month supply) at the end of January were down 1.9 percent for the month and 25.7 percent from a year earlier. The median sales price of $303,900 was up 14.1 percent from January 2020. The press release suggests that home sales would be “20 percent higher if there had been more inventory and more choices.”

Housing starts eased up in January. The Census Bureau indicates that housing starts declined 6.0 percent during the month to a seasonally adjusted annualized rate (SAAR) of 1.68 million units (-2.3 percent versus January 2020). Single-family home starts fell 12.2 percent to 1.323 million, which was still 17.5 percent ahead of the year-ago annualized pace. Looking to the future, the annualized count of issued building permits rose 10.4 percent in December to 1.881 million (+22.5 percent versus January 2020). Single-family home permits gained 3.8 percent during the month and were up 29.9 percent from the prior year. Completions eased 2.3 percent in January to an annualized 1.368 million units (+2.4 percent versus January 2020).

Wholesale prices accelerated in January. The Producer Price Index (PPI) for final demand rose 1.3 percent during the month, the largest single-month jump in the Bureau of Labor Statistics measure since December 2009. The core measure, which removes energy, food, and trade services, surged 1.2 percent. Goods PPI jumped 1.4 percent, with gains for energy and food of 5.1 percent and 0.2 percent for energy and food, respectively. Wholesale gasoline price swelled 13.6 percent.  Services PPI increased 1.3 percent with gains for transportation/warehousing and trade services of 1.3 percent and 1.0 percent, respectively. Over the past year, PPI has risen 1.7 percent with a 12-month comparable for the core measure of +2.0 percent.

Other U.S. economic data released over the past week:

• Jobless Claims (Week ending February 13, First-Time Claims, seasonally adjusted): 861,000, +13,000 vs. the previous week, +646,000 vs. the same week a year earlier). 4-week moving average: 833,250 (+300.6% vs. the same week a year earlier).
• Import Prices (January 2021, All Imports): +1.4% vs. December 2020, +0.9% vs. January 2020. Nonfuel Imports: +0.8% vs. December 2020, +2.5% vs. January 2020.
• Export Prices (January 2021, All Exports): +2.5% vs. December 2020, +2.3% vs. January 2020. Nonagricultural Exports: +2.2% vs. December 2020, +1.5% vs. January 2020.
• Housing Market Index (February 2021, Index (>50= More Homebuilders View Housing Market as “Good” vs. “Poor”), seasonally adjusted): 83 (January 2021:86; February 2020:74).
• Business Inventories (December 2020, Manufacturers and Trade Inventories, seasonally adjusted): $1.972 trillion (+0.6% vs. November 2020, -2.6% vs. December 2019).
• Treasury International Capital Flows (December 2020, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$97.4 billion (vs. November 2020: +$125.8 billion, vs. December 2019: +$66.1 billion).
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