September featured solid retail sales and weakness in housing. Here are the five things we learned from U.S. economic data released during the week ending October 20.
Retail sales bloomed in September. Retail and food services jumped 0.7 percent to a seasonally adjusted $704.9 billion. The Census Bureau measure has risen 3.8 percent over the past year. High prices at the pump led to a 0.9 percent gain in gas station sales, while activity at auto & parts dealers grew 1.1 percent. Net of both, core retail sales were up 0.6 percent in September and 4.0 percent over the past year. Increasing were sales at retailers focused on health/personal care (+0.8 percent) and groceries (+0.4 percent). Restaurants/bars reported a 0.9 percent sales improvement. Sales declined at apparel retailers (-0.8 percent), electronics/appliance stores (-0.8 percent), and building materials retailers (-0.2 percent).
Previously owned home sales slumped to a 13-year low in September. Existing home sales fell 2.0 percent to a seasonally adjusted annualized rate (SAAR) of 3.96 million units. Sales grew 4.2 percent in the Northeast but declined in the West (-5.3 percent), Midwest (-4.1 percent), and South (-1.1 percent). Sales were off 15.4 percent from a year earlier and at their lowest point since October 2010. Even after growing 2.7 percent, inventories remained sparse at 1.130 million homes (the equivalent of a 3.4 month supply). The median sales price of $394,300 was up 2.8 percent from a year earlier. The National Association of Realtors blamed weak sales on “limited inventory and low housing affordability.”
Housing starts rose in September. The Census Bureau estimates housing starts surged 7.0 percent to a seasonally adjusted annualized rate (SAAR) of 1.358 million units. Even with the rise, starts remained 7.2 below year-ago levels. Single-family and multi-family home starts grew 3.2 percent and 17.2 percent, respectively. Looking towards the future, the annualized count of issued building permits fell 4.4 percent to 1.541 million. Permits were down 7.2 percent from a year earlier. Single-family permits increased 1.8 percent but fell 14.0 percent for multi-family homes. Completions jumped 6.6 percent to an annualized 1.453 million, 1.0 percent above year-ago levels.
Manufacturing output increased in September. The Federal Reserve reports that manufacturing output grew a seasonally adjusted 0.4 percent after slipping 0.1 percent in August. Durables production soared an annualized 2.3 percent, while that for nondurable fell 2.4 percent. Auto production managed to inch up 0.3 percent despite strikes at a number of factories. Overall industrial production grew 0.3 percent in September after holding steady during the previous month. Mining output gained 0.3 percent but fell 0.3 percent at utilities. Over the past year, manufacturing production has declined 0.8 percent and overall industrial production was up 0.1 percent.
Forward-looking data continues to point to uneven economic activity. The Conference Board’s Leading Economic Index (LEI) dropped 0.7 percent to 104.6 (2016=100). The LEI has declined 3.4 percent over the past six months. Only two of ten LEI components—jobless claims and new consumer goods orders—contributed positively to the index. The Coincident Economic Index (CEI) grew 0.3 percent to 110.9, leading the measure up 1.1 percent over the past six months. All four CEI components made positive contributions. The Lagging Economic Index (LAG) increased 0.2 percent to 118.5 (+0.1 percent versus March 2023). Four of seven LAG components made positive contributions. The Conference Board expects a “shallow recession” early next year.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending October 14, 2023, First-Time Claims, seasonally adjusted): 198,000, +13 vs. the previous week, Unchanged vs. the same week a year earlier). 4-week moving average: 205,750 (+5.0% vs. the same week a year earlier).
- Housing Market Index (October 2023, Index (>50=More Homebuilders View Housing Market as “Good” than “Bad,” seasonally adjusted): 40 (September 2023: 44; October 2022: 38).
- State Employment (September 2023, Nonfarm Payrolls, seasonally adjusted): Increased in 6 states and held steady in 44 states and the District of Columbia vs. August 2023. Increased in 36 states and held steady in 14 states and the District of Columbia vs. September 2022.
- Business Inventories (August 2023, Manufacturers’ and Trade Inventories, seasonally adjusted): $2.549 trillion (+0.4% vs. July 2023; +1.0% vs. August 2022).
- Treasury International Capital (August 2023, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$61.3 billion (July 2023: +46.3 billion; August 2022: +$175.8 billion).
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What We Learned About the U.S. Economy Last Week 