Taking Off: April 12 – 16

March was a good month for retail, manufacturing, and housing. Here are the five things we learned from U.S. economic data released during the week ending April 16.

March featured the second-best ever jump in retail sales. Retail and food services sales rose 9.8 percent to a seasonally adjusted $619.1 billion. Beyond last May (when many retailers partially reopened following the initial pandemic triggered shutdown), this was the biggest single-month percentage gain ever for the Census Bureau measure. Sales rose 15.1 percent at motor vehicle/parts dealers and 10.9 percent at gas stations. Net of both, core retail sales swelled 8.2 percent. Every major retail category reported sales gains for the month, with double-digit percentage gains for sporting goods/hobby stores (+23.5 percent), apparel retailers (+18.3 percent), restaurants/bars (+13.4 percent), department stores (+13.0 percent), building materials retailers (+12.1 percent), and electronics/appliance stores (+10.5 percent).

Manufacturing resumed its winning streak in March. The Federal Reserve reports that manufacturing output jumped a seasonally adjusted 2.7 percent during the month after severe winter weather had caused a 3.7 percent drop in February. Durable manufacturing output rose 3.0 percent (vehicle production gained 2.8 percent after plummeting 10.0 percent in February), while that for nondurables advanced 2.6 percent. Overall industrial production grew 1.4 percent in March after having slowed 2.6 percent during the prior month. Mining output swelled 5.7 percent while that at utilities slowed 11.4 percent (as the weather moderated). Manufacturing output was 3.1 percent ahead of year-ago levels while overall industrial production has a 12-month comparable of +1.0 percent.

Housing starts sharply rebounded in March. The Census Bureau estimates housing starts surged 19.4 percent during the month to a seasonally adjusted annualized rate (SAAR) of 1.739 million units. Starts were up 37.0 percent from a year earlier to their fastest pace since June 2006. Single-family home starts rose 15.3 percent and were 40.7 percent ahead of their March 2020 level. Looking towards the future, building permits advanced 2.7 percent in March to an annualized 1.766 million (+30.2 percent versus March 2020). Single-family home permits grew 4.6 percent during the month. Completions rose 16.6 percent to an annualized 1.580 million homes (+23.4 percent versus March 2020).

Rising gas prices fueled consumer inflation in March. The Consumer Price Index (CPI) swelled by a seasonally adjusted 0.6 percent during the month, its largest single-month increase for the Bureau of the Labor Statistics’ measure since August 2012. Energy CPI surged 5.0 percent, with gasoline prices rising 9.1 percent. Food CPI inched up a far more modest 0.1 percent. Net of energy and food, core CPI advanced 0.3 percent, the biggest increase since last August. Prices increased for transportation services (+1.8 percent), used cars/trucks (+0.5 percent), shelter (+0.3 percent), and medical care services (+0.1 percent). Apparel prices fell 0.3 percent. Over the past year, CPI has risen 2.6 percent while the core CPI had a 12-month comparable of +1.6 percent.

Small business owner sentiment improved in March. The Small Business Optimism Index from the National Federation of Independent Business added 2.4 points to a seasonally adjusted 98.2 (1986=100). The index was at its highest point since last November and 2.2 points ahead of its year-ago mark. Seven of ten index components advanced in March, led by sharp gains for measures tracking economic expectations, expected real sales, and whether it is a good time to expand. The three components that fell during the month focused on earnings trends, capital outlay plans, and current inventories. The press release noted that “finding qualified labor is a critical issue” for many companies.

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

• Jobless Claims (Week ending April 10, First-Time Claims, seasonally adjusted): 576,000, -193,000 vs. the previous week, -4,869,000 vs. the same week a year earlier). 4-week moving average: 683,000 (-86.3% vs. the same week a year earlier).
• University of Michigan Surveys of Consumers (April 2021-preliminary, Index of Consumer Sentiment (1966Q1=100), seasonally adjusted): 86.5 (vs. March 2021: 84.9, April 2020: 71.8).
• Import Prices (March 2021, All Imports): +1.2% vs. February 2021, +6.9% vs. March 2020. Nonfuel Imports: +0.8% vs. February 2021, +3.8% vs. March 2020.
• Export Prices (March 2021, All Exports): +2.1% vs. February 2021, +9.1% vs. March 2020. Nonagricultural Exports: +2.0% vs. February2021, +7.9% vs. March 2020.
• Housing Market Index (April 2021, Index (>50=More Homebuilders View Housing Market as “Good” than View It as “Poor,” seasonally adjusted): 83 (vs. March 2021: 82, vs. April 2020: 30).
• State Employment (March 2021, Nonfarm Payrolls, seasonally adjusted): Payrolls grew in 29 states and essentially held steady in 21 states and the District of Columbia vs. February 2021. Payrolls contracted in 46 states and the District of Columbia and essentially held steady in 4 states vs. March 2020.
• Monthly Treasury Statement (March 2021, Federal Budget Deficit FY21 to Date): -$1.706 trillion (vs. 1^st 6 Months of FY2020: -$743.5 billion).
• Treasury International Capital Flows (February 2021, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): -$7.3 billion (vs. January 2021: +$33.8 billion, vs. February 2020: +$34.0 billion).
• Beige Book

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