Below is the summary from this week’s Monday Economic Report:
Due to the Thanksgiving holiday, only a few economic indicators were released last week, much of them dealing with the housing sector. New residential construction continued to jump higher, up from 863,000 in September to 894,000 in October. Housing starts have risen a whopping 41.9 percent during the past year, reflecting strong market growth. While housing permits edged lower in October, the longer-term trend mirrors that of new starts. Homebuilder confidence and existing home sales have also risen substantially in recent months, with housing at levels not seen in four years. This trend should continue, despite tougher lending standards and other financial barriers threatening potential growth.
The Markit Flash Purchasing Managers’ Index (PMI) for the United States reflects improvements in manufacturing activity in November. Higher sales and output helped to lift the index higher, with export sales even showing growth. Markit also announced that the Chinese manufacturing sector was growing for the first time in 13 months. Europe continues to contract, according to the Markit Flash PMI for the Eurozone, but there was improvement there as well (up from 45.4 in October to 46.2 in November).
Even with some economic indicators strengthening, headwinds in the marketplace persist. Both the Conference Board’s Leading and Coincident Economic Indices rose in October, with manufacturing variables contributing little if anything. Industrial production was down significantly, and new orders and production levels were essentially flat. Slowing export growth and the fiscal abyss are fueling business leaders’ uncertainties. However, they are also concerns for individuals. Increased emphasis on the fiscal abyss in the media has helped to depress consumers’ expectations of the future, according to revised November data from the University of Michigan’s Surveys of Consumers.
This week, we will receive more data on current U.S. manufacturing conditions—in particular, we will learn whether there are improvements (as Markit data show) or persistent weaknesses. This week’s reports include the latest regional surveys from the Dallas, Kansas City and Richmond Federal Reserve Banks and advanced durable goods orders. On Thursday, the Bureau of Economic Analysis will release revised third quarter real GDP, originally estimated to be 1.7 percent. Other highlights include the Federal Reserve’s Beige Book, data on personal spending and the Conference Board’s consumer confidence figures.
Chad Moutray is chief economist, National Associaiton of Manufacturers.