Tag: Housing Starts

Monday Economic Report – March 23, 2015

Here is the summary for this week’s Monday Economic Report: 

The U.S. economy has sputtered a bit in the early months of 2015. While it continues to grow modestly, several economic indicators are weaker than we would prefer. For example, manufacturing production decreased by 0.2 percent in February, declining for the third straight month. Many headwinds have combined to bring about this softness in the manufacturing sector, including global economic weakness, a strong U.S. dollar, the West Coast ports slowdown, a cautious consumer and the weather in some parts of the country. (continue reading…)

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Housing Starts Plummeted in February, but Permits Reflect Continued Strength

The Census Bureau and the U.S. Department of Housing and Urban Development said that residential construction activity plummeted in February, falling 17.0 percent. New housing starts declined from an annualized 1,081,000 in January to 897,000 in February. This was the slowest pace of housing starts since January 2014. Perhaps coincidently, that month was marred by a number of winter storms which were significant enough to lessen GDP and overall economic activity. This most recent report likely suffered from the same thing, particularly with major snowstorms in the Northeast and the Midwest, with starts in those two regions down 56.5 percent and 37.0 percent in February, respectively. Starts in the West were also weak, down 18.2 percent for the month. (continue reading…)

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Monday Economic Report – February 23, 2015

Here is the summary for this week’s Monday Economic Report: 

In the minutes of its January 27–28 meeting, the Federal Open Market Committee (FOMC) provided a nuanced view of the economic outlook. Participants noted that “economic activity had been expanding at a solid pace,” and they were mostly optimistic about the “prospects for further improvement in 2015.” Yet, the FOMC also pointed to some significant headwinds in the U.S. economy, including sluggish global growth, a stronger U.S. dollar, federal government sequestration and reduced crude oil prices. Regarding the latter, the Federal Reserve said that it was concerned that “persistently low energy prices might prompt a larger retrenchment of employment [and capital investment] in these industries.” (continue reading…)

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Housing Starts and Permits Pulled Back a Little in January

The Census Bureau and the U.S. Department of Housing and Urban Development said that residential construction activity pulled back a little in January. New housing starts declined from an annualized 1,087,000 in December to 1,065,000 in January. The good news was that starts have exceeded one million for five straight months, averaging 1,057,400 over that time period. Yet, the numbers for January were also somewhat softer than expected. (continue reading…)

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Monday Economic Report – January 26, 2015

Here is the summary for this week’s Monday Economic Report: 

The European Central Bank (ECB) finally announced its long-awaited quantitative easing program on Thursday. The ECB will purchase 60 million euros in bonds each month until September 2016—totaling at least 1.1 trillion euros overall—in an attempt to stimulate growth. Depending on where the Eurozone economy stands pointing September 2016, the ECB might extend its purchasing beyond that point. The impact on the euro was almost immediate, with the euro exchanging for $1.1206 at Friday’s close, down from $1.3927 on March 17, the high point of 2014. This will complicate manufacturers’ ability to sell goods into Europe, something that was mentioned in the sample comments in the latest Kansas City Federal Reserve Bank’s monthly survey (see below). (continue reading…)

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Housing Starts Rebounded in December, with Progress from Earlier in the Year

The Census Bureau and the U.S. Department of Housing and Urban Development said that new residential construction rebounded in December. New housing starts rose from an annualized 1,043,000 in November to 1,089,000 in December. These data have been up and down for much of the second half of 2014, with December’s value not far from October’s 1,092,000 reading. The underlying story, however, is one of progress. Housing starts averaged 1,052,167 in the second half of 2014, which was a nice improvement from the 955,167 average observed in the first half. In continue to predict that housing starts will exceed 1.1 million in the coming months, and this latest data are relatively close to that mark. (continue reading…)

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Monday Economic Report – December 22, 2014

Here is the summary of this week’s Monday Economic Report: 

Manufacturing production was up sharply in November, with output increasing 1.1 percent for the month and 4.8 percent year-over-year. These healthy gains followed a softer-than-desired autumn, and we hope it suggests that production figures will begin to match the relative optimism regarding expected demand and output seen in a number of sentiment surveys, including the latest NAM/IndustryWeek Survey of Manufacturers. Capacity utilization for the sector was also higher, up from 77.6 percent in October to 78.4 percent in November. This was the highest utilization rate since December 2007, the first month of the Great Recession. Moreover, total industrial production rose 1.3 percent, with utility output in November also up significantly. Mining production was down for the month, but up a whopping 9.3 percent over the past 12 months, with the sector benefiting from increased energy exploration. (continue reading…)

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Monday Economic Report – November 24, 2014

Here is the summary for this week’s Monday Economic Report:

Central banks around the world have acted recently in an attempt to lift a sagging global economy. On Friday, for instance, the European Central Bank (ECB) announced that it has begun purchasing asset-backed securities, finally beginning a quantitative easing program that some have long sought. Earlier in the day, ECB President Mario Draghi said that “we will do what we must” to spur economic growth. In addition, the People’s Bank of China surprised markets by cutting interest rates on Friday. These actions followed the Bank of Japan’s announcement on October 31 that it would increase the amount of its monthly asset purchases. (continue reading…)

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Housing Trends Remain Positive in October Despite a Slight Drop in Starts

The Census Bureau and the U.S. Department of Housing and Urban Development said that housing data were mixed in October, but the overarching trend line remains positive. New housing starts eased somewhat, down from a revised 1,038,000 annualized units in September to 1,008,000 in October. Yet, housing permits – a proxy of future activity – rose from 1,031,000 to 1,080,000 units. That was the highest level of residential permitting since June 2008, suggesting movement in the right direction. In addition, new starts have also edged higher, up from an average of 955,167 in the first half of 2014 to 1,027,000 in the four months so far in the second half. (continue reading…)

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Monday Economic Report – October 20, 2014

Here is the summary for this week’s Monday Economic Report:

Global financial markets were highly volatile last week, with investors concerned about slower growth in Europe and an Ebola outbreak in the United States, among other factors. Indeed, industrial production in the Eurozone fell 1.8 percent in August, and activity was down largely across-the-board, most notably in Germany (down 4.3 percent), the Eurozone’s largest economy. Sluggish income and labor market growth in Europe has also pushed inflationary pressures lower, with year-over-year pricing changes of just 0.3 percent in September. Despite such worries, equity markets began to rebound on Friday, with the Dow Jones Industrial Average (DJIA) closing at 16380.41. Nonetheless, the DJIA remains 5.2 percent below its all-time high of 17279.74 on September 19.

Still, the U.S. economy has shown signs of resilience. Despite a softer August, manufacturing production increased 0.5 percent in September. Over the past 12 months, output in the sector has risen 3.7 percent. While this was slower than its July year-over-year pace, it reflects a nice improvement from the more sluggish 1.5 percent rate in January.

Moreover, surveys from the Manufacturers Alliance for Productivity and Innovation (MAPI) and the New York and Philadelphia Federal Reserve Banks observed expanding activity levels in their latest reports. Each measure eased somewhat in October, but they were expansionary nonetheless. The weakest of these reports was the Empire State Manufacturing Survey, which observed a slight contraction in new orders. Yet, even there, respondents remained mostly optimistic about demand and output over the next six months. Along those lines, MAPI has a generally upbeat outlook, predicting that manufacturing production will increase by 3.4 percent in 2014 and 4.0 percent in 2015.

Housing starts exceeded 1 million again, increasing from an annualized 957,000 units in August to 1,017,000 in September. This continues a slow-but-steady trend upward, with an average of 978,111 so far in 2014 relative to an average of 930,000 for all of 2013. Still, there was relatively weak housing activity throughout much of the second half of last year and the first half of this year, and the latest data suggest that the sector has begun to stabilize somewhat. I continue to predict housing starts solidly in the 1.1 million unit range by the beginning of 2015. Homebuilder confidence has also reflected a positive outlook despite slipping a bit in October. Lower mortgage rates might spur more residential construction activity. According to Freddie Mac, average 30-year fixed mortgage rates fell to 3.97 percent this past week, their lowest level since June 2013.

Meanwhile, there was mixed news on the consumer front. On the positive side, consumer confidence reached a pre-recessionary high, according to the University of Michigan and Thomson Reuters. This is a sign that improvements in the economy and lower gasoline prices have helped to lift Americans’ spirits. Yet, there are also lingering worries about income and labor market growth, and consumers remain somewhat cautious overall. Retail spending declined 0.3 percent in September, suggesting softness as we begin autumn. At the same time, year-over-year growth in retail sales was up 4.3 percent, a fairly decent rate, and the holiday season retail outlook looks pretty strong. We hope we will see better consumer spending data in the coming months.

This week, we will get additional insights regarding the health of the global economy. Markit will release Flash Purchasing Managers’ Index (PMI) data for China, Japan, the Eurozone and the United States. The European data are expected to show continued weakness, but we will be watching for signs of progress in the Chinese manufacturing sector, which has decelerated in recent months. The Kansas City Federal Reserve Bank will also unveil its latest manufacturing survey, and it is expected to show continued expansion in its district. Beyond these surveys, we will learn about growth in consumer prices, and if they are similar to the producer price index data released last week, they will reflect easing in both food and energy costs. Other highlights this week include reports on existing and new home sales, leading indicators and state employment.

Chad Moutray is the chief economist, National Association of Manufacturers. 

DJIA - oct2014

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