There were a few important reports on the economy released this morning. First, data from the U.S. Census Bureau showed that privately-owned housing starts in December grew at a seasonally adjusted annual rate (SAAR) of 1.192 million units. That was an 8.2 percent decrease from November’s upward-revised print and well below economists’ forecasts. All of the weakness occurred in single-family housing starts, which fell by 11.8 percent last month, while multi-family starts (rentals) lifted by 2.6 percent. Regionally, housing starts fell across the country in December but the largest decline was found in the South (-14.2 percent). As for building permits, this metric of future construction activity edged lower last month, but overall remains historically elevated. A similar pattern could be seen in the NAHB’s monthly homebuilder sentiment gauge, and NAHB chairman Randy Noel added that “Builders are confident that changes to the tax code will promote the small business sector and boost broader economic growth. Our members are excited about the year ahead, even as they continue to face building material price increases and shortages of labor and lots.”
Elsewhere, manufacturing activity in the Mid-Atlantic region of the country expanded at a slower pace this month, according to a new report from the Federal Reserve Bank of Philadelphia (FRBP). Specifically, the general business conditions index fell from +27.9 to +22.2 in January, much worse than anticipated and the weakest headline reading since August. However, it is worth remembering that any print above zero signals activity expansion, and January’s 22.2 reading is also well-above the pre-election level. Under the hood, current measures of shipments and hours worked improved this month, but new orders and total employment deteriorated. Forward-looking indicators (six months ahead) also softened in January, albeit from near-record highs. Managers in this month’s survey were asked a few special questions about customer demand trends, and most firms (72 percent) reported an increase in underlying demand. Twelve percent even characterized underlying demand as increasing significantly, and nearly 70 percent anticipate increasing production in the first quarter of 2018.
Sources: Econoday, Census Bureau, NAHB, FRBP, FRBSLPost author: Charles Couch