There were two important reports on the U.S. economy released this morning. First, data from the Census Bureau showed that sales of new single-family homes in America surged by 12.4 percent in July to a seasonally adjusted annual rate of 654,000 units. This was significantly better than economists had expected, the largest monthly gain since 2014, and a big enough increase to raise the year-over-year growth rate for new home sales to 31.3 percent. Regionally, home sales improved everywhere in the country last month expect in the West, where sales were flat, and the South experienced the best overall gain (+18.1 percent). The median sales price of new houses sold in July fell to $294,600, the inventory of new single-family homes slid to 233,000 units, and months’ supply declined to 4.3 at the current sales pace. Clearly inventories remain tight, which should be supportive of selling prices, but overall this was a solid report which is encouraging because historically new home sales tend to head sharply lower ahead of a recession.
Elsewhere, a report from the Federal Reserve Bank of Richmond showed that manufacturing activity in the Mid-Atlantic region of the country slowed significantly this month, with the composite index plunging from +10.0 to -11.0. That was the lowest reading since 2013 and the largest month-over-month decline on record. Under the hood, measures of shipments, new order volumes, capacity utilization, vendor lead-time, and hours worked, all deteriorated considerably in August but total employment and worker compensation improved. Business managers’ outlooks on activity over the next six months were much more positive but capital expenditure plans declined slightly. Altogether, this was a very disappointing report which together with the other regional manufacturing activity data released this month suggests that it is still too early to tell whether the “industrial recession” in America that started last summer has truly ended.
Sources: Econoday, Twitter, Bloomberg, ZH, U.S. Census Bureau, FRBR, FRBSLPost author: Charles Couch