Tag: Housing Starts

Retail and Manufacturing Fail to Impress: May 13 – 17

Retail and Manufacturing Fail to Impress: May 13 – 17

Kevin Roth

Retail and manufacturing each stumbled in April.  Here are the five things we learned from U.S. economic data released during the week ending May 17. 

#1Retail sales wobbled in April. The Census Bureau values retail and food services sales at a seasonally adjusted $513.4 billion, down 0.2 percent from March. Sales at auto dealers/parts stores slowed 1.1 percent but grew 1.8 percent at gas stations (thanks to higher prices at the pump). Net of both of these categories, core retail sales declined 0.2 percent in April and have risen a not particularly vigorous 3.2 percent over the past 12 months. During April, sales gained at department stores (+0.7 percent), restaurants/bars (+0.2 percent), sporting goods/hobby retailers (+0.2 percent), and grocery stores (+0.2 percent), but fell at retailers focused on building materials (-1.9 percent), electronics/appliances (-1.3 percent), apparel (-0.2 percent), and health/personal care (-0.2 percent).

#2Both manufacturing and overall industrial production faltered in April. The Federal Reserve estimates industrial production dropped for the third time in four months with a seasonally adjusted 0.5 percent decline in April that left the measure up a paltry 0.9 percent over the past year. Manufacturing output also contracted by 0.5 percent during the month (also its third decrease in four months) and off 0.2 percent from a year earlier. Durable goods production slumped 0.9 percent, with drops of at least two percent for motor vehicles, machinery, and electrical equipment/appliances. The output of nondurables slowed 0.1 percent. Warmer than average April weather led to a 3.5 percent reduction in utilities’ output while mining output rose 1.6 percent, thanks to increased oil and natural gas extraction and more coal mining. 

#3Housing starts had their best month in April since last summer. The Census Bureau places housing starts at a seasonally adjusted annualized rate of 1.205 million units, up 5.7 percent from March but still 2.5 percent under from the pace of April 2018. Starts of single-family homes rose 6.2 percent to an annualized 854,000 units (its best month since January) while multi-family unit home starts edged up 2.3 percent to 359,000 (its best since last November). Permit data suggest modest growth over the near-term, as the rate of issued housing permits eked out a 0.6 percent gain to 1.96 million permits (which was 5.0 percent below the year-ago pace). Housing completions slowed 1.4 percent during the month to an annualized 1.312 million homes (+5.5 percent versus April 2018).

#4Homebuilders grew more optimistic about the housing market in May. The National Association of Home Builders’ Housing Market Index (HMI) increased by three points to a seasonally adjusted 66. This was the 59th consecutive month in which the HMI was above a reading of 50, indicating that a higher percentage of homebuilders saw the housing market as being “good” rather than being “poor.” The index improved in three of four Census regions while holding steady in the Midwest. Also moving forward during the month were indices tracking single-family home sales (up three points to 72), expected sales of single-family homes (up a point to 72), and traffic of prospective buyers (up two points to 49). The press release noted that survey respondents had “characterize[d] sales as solid, driven by improved demand and ongoing low overall supply.”

#5Small business owner sentiment firmed in April. The National Federation of Independent Business’s Small Business Optimism Index grew for the third consecutive month with a 1.7 point gain to a seasonally adjusted 103.5 (1986=100). While off from the 104.8 reading a year earlier, the index has been above 100.0 for 29 straight months. Eight of the ten index components improved from their March readings, led by earnings trends, expected credit conditions, and plans to increase inventories. The press release noted that “[t]he ‘real’ economy is doing very well versus what we see in financial market volatility.”

Other U.S. economic data released over the past week:
– Jobless Claims (week ending May 11, 2019, First-Time Claims, seasonally adjusted): 212,000 -16,000 vs. previous week; -9,000 vs. the same week a year earlier). 4-week moving average: 225,000 (+5.2% vs. the same week a year earlier).
– Import Prices (April 2019, All Imports, not seasonally adjusted): +0.2% vs. March 2019, -0.2% vs. April 2018. Nonfuel Imports: -0.1% vs. March 2019, -0.9% vs. April 2018.
– Export Prices (April 2019, All Exports, not seasonally adjusted): +0.2% vs. March 2019, +0.3% vs. April 2018.  Nonagricultural Exports: +0.4% vs. March 2019, +0.7% vs. April 2018.
– Leading Indicators (April 2019, Index (2016=100)):  112.1 (vs. March 2019: 111.9, vs. April 2018: 109.1).
– University of Michigan Consumer Sentiment (May 2019-preliminary, Index of Consumer Sentiment (1966Q1=100), seasonally adjusted): 102.4 (vs. April 2019: 97.2, May 2018: 98.0).
– State Employment (April 2019, Nonfarm Payrolls, seasonally adjusted): Vs. March 2019: Up in 10 states, down in 1 state, and essentially unchanged in 39 states and the District of Columbia. Vs. April 2018: Up in 29 states and essentially unchanged in 21 states and the District of Columbia.
– Business Inventories (March 2019, Manufacturers’ and Trade Inventories, seasonally adjusted): $2.018 trillion (Unchanged vs. February 2019, +5.0% vs. March 2018).
– Treasury International Capital Flows (March 2019, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): -$20.6 billion (vs. February 2019: +$52.8 billion, vs. March 2018: -$14.8 billion).

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

Spring Had Sprung for Retailers in March: April 15 – 19

Spring Had Sprung for Retailers in March: April 15 – 19

Kevin Roth

Retail sales rebounded while manufacturing sputtered in March. Here are the five things we learned from U.S. economic data released during the week ending April 19.  

#1Retail sales surged in March. The Census Bureau places total U.S. retail and food services sales at a seasonally adjusted $514.1 billion. The 1.6 percent increase from February was the largest single-month percentage gain in retail sales since the fall of 2017 and left sales up 3.6 percent from a year earlier. A part of the increase was thanks to improved sales at both auto dealers/parts stores (+3.1 percent) and gas stations (+3.5 percent), the latter the product of higher gasoline prices. Core retail sales rose a still robust 0.9 percent for the month, reversing February’s 0.7 percent sales decline and placing the measure 3.6 percent ahead of that from a year earlier. Sales activity rose at retailers focused on apparel (+2.0 percent), furniture (+1.7 percent), groceries (+1.2 percent), electronics/appliances (+0.5 percent), building materials (+0.3 percent), and health/personal care (+0.2 percent), along with a 0.8 percent bounce at restaurants and bars. The only major retailer category to suffer a sales decline during the month was sporting goods/hobby stores with a 0.3 percent drop while department store sales were flat.

#2Manufacturing output was flat in March. The Federal Reserve estimates manufacturing production was unchanged during the month after having increased 0.3 percent in February, leaving output up a soft 1.0 percent over the past year. Durable goods output slipped 0.1 percent, with output falling sharply for wood products and automobiles but growing for primary metals and electronics/computers. Nondurable goods production eked out a 0.1 percent increase, boosted by gains for textiles, petroleum/coal products, and chemicals. Overall, industrial production declined 0.1 percent in March, reversing February’s 0.1 percent gain. Mining output dropped 0.8 percent while that at utilities inched up 0.2 percent. The former has risen 10.5 percent over the past year while the latter’s 12-month comparable was +3.8 percent.

#3The trade deficit narrowed in February. The Census Bureau and the Bureau of Economic Analysis report that exports grew by $2.3 billion to $209.7 billion (+2.3 percent versus February 2018) while imports inched up by $0.6 billion to $259.7 billion (-0.5 percent versus February 2018). As a result, the trade deficit contracted by $1.8 billion to -$49.4 billion, its smallest reading since last June. The goods deficit shrank by $1.2 billion to -$72.0 billion while the services surplus grew by $0.5 billion to +$22.6 billion. The former was the result of higher exports of civilian aircraft and automobiles/parts and a decline in imports of industrial supplies/materials. The U.S. had its biggest goods trade deficits with China, the European Union, and Mexico.

#4Forward-looking economic indicators improved in March. The Conference Board’s Leading Economic Indicators (LEI) added 4/10ths of a point in March to a reading of 111.9 (+3.1 percent versus March 2018). Eight of ten LEI components made positive contributions, led by first-time unemployment insurance claims and consumers’ expectations for the economy. The coincident index grew by 1/10th of a point to 105.8 (+2.1 percent versus March 2018), with three of four components making positive contributions (industrial production was the exception). The lagging index also added 1/10th of a point as it grew to 107.0 (+2.9 percent versus March 2018), with four of seven components improving from their February readings. The press release notes that even with March’s gain, the LEI “continues to moderate, suggesting that growth in the US economy is likely to decelerate toward its long-term potential of about 2 percent by year end.”

#5Housing starts and building permits declined in March. The Census Bureau estimates housing starts slipped 0.3 percent during the month to a seasonally adjusted annualized rate of 1.139 million units. This was 14.2 percent below the March 2018 rate and the measure’s lowest mark since May 2017. Starts of single-family homes slowed 0.4 percent to an annualized 785,000 while multi-family unit starts slumped 3.4 percent. Looking towards the future, the number of issued building permits declined 1.3 percent to an annualized 1.269 million permits (-7.8 percent versus March 2018), with declines for single-family and multi-family homes of 1.1 percent and 2.7 percent, respectively. The annualized count of completed homes also fell, with a 1.9 percent drop to 1.338 million homes, which was nevertheless up 6.8 percent from a year ago.

Other U.S. economic data released over the past week:
– Jobless Claims (week ending April 13, 2019, First-Time Claims, seasonally adjusted): 192,000 (-5,000 vs. previous week; -35,000 vs. the same week a year earlier; fewest since September 6, 1969). 4-week moving average: 201,250 (-10.8% vs. the same week a year earlier).
– Housing Market Index (April 2019, Index (>50=greater percentage of homebuilders viewing housing market as “good” versus being “poor,” seasonally adjusted): 63 (vs. March 2019: 62, April 2018: 68).
– State Employment (March 2019, Nonfarm Payrolls, seasonally adjusted) Vs. February 2019: Grew in 1 state, essentially unchanged in 49 states and the District of Columbia. Vs. March 2018: Grew in 22 states, essentially unchanged in 28 states and the District of Columbia.
– Business Inventories (February 2019, Manufacturers’ and Trade Inventories, seasonally adjusted): $2.017 trillion (+0.3 percent versus January 2019, +4.9% vs. February 2018).
– Treasury International Capital Flows (February 2019, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$42.4 billion (vs. January 2019: -$19.6 billion, vs. February 2018: +$57.6 billion.
– Beige Book

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

GDP Growth Slowed in Q4, Was Solid for 2018: February 25 – March 1

GDP Growth Slowed in Q4, Was Solid for 2018: February 25 – March 1

Kevin Roth

GDP growth slowed during Q4 but was relatively healthy for all of 2018. Here are the five things we learned from U.S. economic data released during the week ending March 1. 

#1The economic expansion slowed a bit during the final three months of 2018. The first estimate of fourth-quarter 2018 gross domestic product (GDP) places economic growth at a seasonally adjusted annualized rate (SAAR) of +2.6 percent, compared to gains of +4.2 percent and +3.4 percent in Q2 and Q3, respectively. GDP has expanded 3.1 percent since Q4 2017. The Bureau of Economic Analysis also reports that GDP grew 2.9 percent for all of 2018, an improvement over gains of +1.6 percent and +2.2 percent in 2016 and 2017, respectively. Positive contributors to Q4 GDP growth were (in decreasing order) personal consumption expenditures, nonresidential fixed investment (i.e., business investment), exports, the change in private inventories, and government spending. Dragging down Q4 GDP were imports and residential fixed investment (i.e., housing). The BEA will update its Q4 GDP estimate twice over the next two months.GDP Growth 2015-2018 03019

#2Personal spending slumped in December, as had personal income in January. The Bureau of Economic Analysis reports that real personal consumption expenditures (PCE) fell 0.6 percent in December. Real spending on goods slumped 1.4 percent during the month, pulled down by declines for durable and nondurable goods of -1.9 percent and -1.2 percent, respectively. The reduction in spending on services was at a more modest -0.2 percent. Real personal disposable income jumped 1.0 percent in December, with gains for nominal disposable income and nominal personal income growing 1.0 percent the same month. (“Real” measures control for inflation while “nominal” measures do not.) The same report also included January nominal income data, but the story was not as good as nominal personal income slipped 0.1 percent (its first drop since November 2015) while nominal disposable income declined 0.2 percent. Delayed data collection due to the partial federal government shutdown prevented the publication of January data of real disposable income and personal consumption expenditures.

#3Manufacturing activity grew at a slower rate in February. The PMI, the headline index from the Institute for Supply Management’s Manufacturing Report on Business, lost 2.4 points during the month to a reading of 54.2. Despite the PMI dropping to its lowest point since November 2016, the measure has been above a reading of 50.0 for 30 straight months, indicative of an expanding manufacturing sector. Four of five PMI components declined in February: production (-5.7 points), employment (-3.2 points), new orders (-2.7 points), and supplier deliveries (-1.3 points). The index tracking inventories added 6/10ths of a point during the month. Sixteen of 18 tracked manufacturing sector expanded in February, led by printing, textile mills, and computer/electronics.

#4Housing starts plummeted in December. The Census Bureau estimates housing starts dropped 11.2 percent during the month to a seasonally adjusted annualized rate (SAAR) of 1.078 million units. This was 10.9 percent under the year-ago pace of starts. Starts of multi-family units (five or more units) slumped 22.0 percent while single-family home starts slowed 6.7 percent. Starts fell in three of four Census regions during December but held steady in the Northeast. Looking towards the future, the number of issued building permits edged up 0.3 percent to 1.326 million (SAAR), an increase of 0.5 percent from a year earlier. The number of permits issued to build single-family homes dropped 2.2 percent while that for multi-family units of at least five units jumped 5.7 percent. The annualized rate of completed homes slowed 2.7 percent to 1.097 million, an 8.4 percent decline from December 2017.

#5Consumer sentiment rebounded in February. The Conference Board’s Consumer Confidence jumped by 9.7 points during the month to a seasonally adjusted 131.4 (1985=100), its first increase in four months. Much of the gain came from an improved outlook for near-future business conditions as the expectations index surged a full 14 points to 103.4. The current conditions measure added 3.3 points to 173.5. 41.2 percent of surveyed consumers saw current business conditions as “good” compared to just 10.8 percent saying there were “bad.” Similarly, 46.1 percent of survey respondents viewed jobs as being “plentiful” versus 11.8 percent of them as being “hard to get.”

Meanwhile, the University of Michigan’s Index of Consumer Sentiment grew to a seasonally adjusted reading of 93.8 (1966Q1=100), up 2.6 points for the month but still below the year-ago reading of 99.7. The present conditions index edged down by 3/10ths of a point to 84.4 (February 2018: 90.0) while the expectations index improved by 4.5 points to 84.4 (February 2018: 90.0). The press release said that the survey data suggests real personal spending will grow 2.6 percent for all of 2019, which “will mean that the expansion is expected to set a new record length by mid-year.

Other U.S. economic data released over the past week:
– Jobless Claims (week ending February 23, 2019, First-Time Claims, seasonally adjusted): 225,000 (+8,000 vs. previous week; +8,000 vs. the same week a year earlier). 4-week moving average: 229,000 (+2.7% vs. the same week a year earlier).
– Chicago Fed National Activity Index (January 2019, Index (0.00=U.S. Expanding at its Historical Average): -0.43 (vs. December 2018: +0.05; January 2018: -0.29).
– Factory Orders (December 2018, New Orders for Manufactured Goods, seasonally adjusted): $499.9 billion (+0.1% vs. November 2018, +2.4% vs. December 2017).
– Pending Home Sales (January 2019, Index (100=2001), seasonally adjusted): 103.2 (December 2018: 98.7; January 2018: 105.6).
– FHFA House Price Index (December 2018, Purchase-Only Index, seasonally adjusted): +0.3% vs. November 2018, +5.6% vs. December 2017.
– Case-Shiller Home Price Index (December 2018, 20-City Index, seasonally adjusted): +0.2% vs. November 2018, +4.2% vs. December 2017.
– Agricultural Prices (January 2019, Prices Received by Farmers (Index: 2011=100)): -4.5% vs. December 2018, -0.7% vs. January 2018.

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.