NAHB: Single-family home sales expectations at highest level since June 2005

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The National Association of Home Builders (NAHB) and Wells Fargo reported that the Housing Market Index (HMI) was unchanged at 72 in February. The headline measure remained not far from December’s reading, which was the best since July 1999. More importantly, homebuilders are very optimistic about the next six months, with the index for expected sales of single-family homes rising from 78 to 80, its best reading since June 2005. NAHB Chief Economist Robert Dietz added, “With ongoing job creation, increasing owner-occupied household formation, and a tight supply of existing home inventory, the single-family housing sector should continue to strengthen at a gradual but consistent pace.” The release cited the “pro-business political climate” for the recent uptick in sentiment, but also cautions about supply constraints, including “shortages of labor and building material price increases.”

To put the current numbers in perspective, the HMI stood at 58 and 65 in February 2016 and February 2017, respectively. Readings over 50 suggest that more homebuilders are positive than negative in their economic outlook. The HMI has exceeded 50 in every month since July 2014, and it has exceeded 60—which would signify robust growth—for 18 straight months. In February, sentiment strengthened in the Midwest but was somewhat softer (but still quite positive) in the Northeast and West.

Producer Prices for Final Demand Goods Jumped 0.7% in January on Higher Energy Costs

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The Bureau of Labor Statistics said that producer prices for final demand goods and services rose 0.4 percent in January, bouncing back after being unchanged in December. For manufacturers, producer prices for final demand goods jumped 0.7 percent in January, its fastest pace in two months. This was led by sharply higher energy costs, which were up 3.4 percent in January. This was largely consistent with recent observations in the spot price for West Texas intermediate (WTI) crude oil, which increased from an average of $57.88 in December to $63.70 in January, its highest monthly average since November 2014. Read More

Philly Fed: Manufacturing Activity Expanded Solidly in February, with Prices Accelerating Strongly

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The Federal Reserve Bank of Philadelphia said that manufacturing activity accelerated once again in February, continuing to expand at healthy rates in the first two months of 2018. The composite index of general business activity rose from 22.2 in January to 25.8 in February. To illustrate just how much this measure has reflected strong growth of late, the composite index averaged a rather robust 26.5 over the past 15 months. (It averaged just 1.1 in the 15 months prior to that.) In February, the data were mixed. New orders (up from 10.1 to 24.5) and hiring (up from 16.8 to 25.2) both improved, but shipments (down from 30.3 to 15.5) and the average workweek (down from 16.7 to 13.7) slowed, even as all of these indices indicated solid gains in February. Read More

Manufacturing Production Began 2018 Unchanged, but Still Reflects Progress, up 1.8% Year-Over-Year

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The Federal Reserve said that manufacturing production was unchanged in January for the second straight month. As such, output in the sector essentially has taken a pause at the beginning of 2018, but we would anticipate that breather to be short-lived. Indeed, we would expect manufacturing production to rise by 2.1 percent in 2018, up from 1.7 percent in 2017. In terms of the latest data, manufacturing production rose by 1.8 percent since January 2017, slowing from the more robust 2.3 percent pace seen in November, which likely represented a rebound in the aftermath of several hurricanes. Much like the headline number, manufacturing capacity utilization was flat in January’s report, unchanged at 76.2 percent. Read More

New York Fed: Manufacturing Activity Remained Strong but Eased in February; Input Costs Accelerated

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Manufacturing activity in the New York Federal Reserve Bank’s district eased somewhat in February but remained strong overall. In the latest Empire State Manufacturing Survey, the composite index of general business conditions declined from 17.7 in January to 13.1 in February. While this was the fourth straight deceleration in the headline index, off from the three-year high of 28.8 in October, the pace of expansion has remained decent overall, averaging 26.9 over the past 14 months. In February, the underlying data were mixed. New orders (up from 11.9 to 13.5), employment (up from 3.8 to 10.9) and the average workweek (up from 0.8 to 4.6) each picked up in the latest data, but shipments (down from 14.4 to 12.5) and inventories (down from 13.8 to 4.9) slowed a little.. Read More

Retail Spending Activity Disappointed in January

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Retail spending declined by 0.3 percent in January, which was a disappointing, especially given the consensus expectation for a 0.2 percent increase. Moreover, retail sales were unchanged in December, a notable revision from the prior estimate of a 0.4 percent gain. As a result of these latest figures, it is clear that consumer spending has been softer in the past two months than we would prefer. Yet, the larger narrative remains an encouraging one, with consumers being a bright spot over the past year. Indeed, retail sales have risen 3.7 percent year-over-year in January, suggesting a decent pace overall even if it represented a deceleration from the more-robust rate of 5.2 percent in December. Excluding automobiles, the pace was even stronger, with retail sales up 4.2 percent over the past 12 months. Read More

Higher Energy Costs Pushed Consumer Prices Higher in January

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The Bureau of Labor Statistics said that consumer prices jumped 0.5 percent in January, its fastest pace in four months. The increase in consumer inflation was led by higher energy costs, which rose by 3.0 percent in January, with gasoline prices up 5.7 percent and fuel oil up 9.5 percent. This is largely consistent with data from the Energy Information Administration, which pegged the average price for regular conventional gasoline at $2.384 per gallon on December 25 but increasing to $2.516 a gallon on January 29. At the same time, food prices rose by 0.2 percent for the second straight month. Since January 2017, food and energy costs have increased 1.7 percent and 5.9 percent, respectively. Read More