Shopfloor Economics

Housing Starts and Permits Pulled Back in February but Were Still Encouraging Overall

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The Census Bureau and the Department of Housing and Urban Development reported that housing starts pulled back in February after notching the fastest pace since August 2007 in January. New residential construction declined 7.0 percent from an annualized 1,329,000 units in January to 1,236,000 units in February. Despite the deceleration in activity, there were some positives to note in the latest report. First, for the fifth straight month, housing starts exceeded 1.2 million units at the annual rate, which suggests that we might finally have breached and sustained that threshold of activity, which is promising. Second, single-family housing starts rose from 877,000 units in January to 902,000 units in February. It was only the second time since September 2007 that single-family construction activity has risen above 900,000 units, following the rate of 946,000 units in November. Read More

NAHB: Builder Optimism Remains Solid in March, with a Strong Outlook for Sales Over the Next Six Months

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The National Association of Home Builders (NAHB) and Wells Fargo reported that the Housing Market Index (HMI) eased marginally, down from 71 in February to 70 in March. Yet, the headline measure remained not far from December’s reading (74), which was the best since July 1999. More importantly, homebuilders are very optimistic about the next six months, despite the index for expected sales of single-family homes declining from 80—the best reading since June 2005—to 78. NAHB Chairman Randy Noel noted, “Builders’ optimism continues to be fueled by growing consumer demand for housing and confidence in the market.” NAHB Chief Economist Robert Dietz added, “A strong labor market, rising incomes and a growing economy are boosting demand for homeownership even as interest rates rise.” Read More

Philly Fed: Manufacturers Continue to Report Healthy Expansion in March

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The Federal Reserve Bank of Philadelphia said that manufacturing activity continued to be healthy in its district in March. The composite index of general business activity eased somewhat from 25.8 in February to 22.3 in March, but new orders (up from 24.5 to 35.7) and shipments (up from 15.5 to 32.4) accelerated strongly at their fastest paces in 12 months. More importantly, just over 52 percent of respondents said that new orders had increased in March, with just 16.4 percent noting declines. In addition, the labor market remained tight, with employment (up from 25.2 to 25.6) strengthening slightly and nearly 35 percent of those completing the survey suggesting that hiring had picked up in March. The average workweek (down from 13.7 to 12.8) slowed a bit in this report but was strong overall. Read More

New York Fed: Continued Solid Gains in Manufacturing Activity in March

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Manufacturing activity in the New York Federal Reserve Bank’s district continued to show solid gains in manufacturing activity in March. In the latest Empire State Manufacturing Survey, the composite index of general business conditions rose from 13.1 in February to 22.5 in March. After decelerating for four straight months from the three-year high of 28.8 in October, it was encouraging to see the headline index rebound once again. Many of the key underlying data points were also higher in March, including faster expansions for new orders (up from 13.5 to 16.8), shipments (up from 12.5 to 27.0), the average workweek (up from 4.6 to 5.9) and inventories (up from 4.9 to 5.6). Read More

Producer Prices for Final Demand Goods Slowed in February, but Up 2.9 Percent Over the Past 12 Months

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The Bureau of Labor Statistics reported that producer prices for final demand goods and services rose 0.2 percent in February, easing somewhat from the 0.4 percent gain in January. For manufacturers, producer prices for final demand goods edged down 0.1 percent in February, pulling back from the 0.7 percent increase in January. Energy costs helped to boost January’s jump in input costs, with energy prices up 3.4 percent in that release; in the latest figures, energy fell 0.5 percent. Food prices declined 0.4 percent, drifting lower for the third straight month. On a year-over-year basis, final demand food and energy costs have risen 0.6 percent and 9.3 percent, respectively. Excluding food and energy, producer prices for final demand goods rose 0.2 percent in this report, increasing for the seventh consecutive month.   Read More

Retail Spending Activity Off by 0.1 Percent for the Third Straight Month in February

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Retail spending declined by 0.1 percent in February for the third straight month, starting the new year off with disappointing consumer data. Motor vehicle and parts sales were down 0.9 percent in February, decreasing for the fourth consecutive month, and one of the larger drags in the latest report. Along those lines, retail spending excluding automobiles was up 0.2 percent in February, extending the 0.1 percent gain seen in January. Despite the softer figures, the larger narrative remains an encouraging one, with consumers being a bright spot over the past year. Indeed, retail sales have risen 4.0 percent year-over-year in February, suggesting a decent pace overall even if it represented a deceleration from the more-robust rate of 5.9 percent in November. Excluding motor vehicles and parts, the pace was somewhat stronger, with retail sales up 4.4 percent over the past 12 months. Read More