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 16.6 percent in April to a seasonally adjusted annual rate of 619,000 units. This is the first month-over-month increase of 2016, the largest sequential gain since 1992, and significantly better than economists had expected. The median sales price of new houses sold in May rose to $321,100, the inventory of new single-family homes edged lower to 243,000 units, and months’ supply plunged to 4.7 at the current sales pace. New home sales rose everywhere last month except in the Midwest region of the country and the prior month’s figure was revised higher. Altogether, this is a very encouraging report which supports the generally positive data released last week on the larger existing home sales segment of the U.S. housing market. Ian Shepherdson, chief economist at Pantheon Macroeconomics, added that “We don’t now expect sales to rise much further in the short-term, but we do hope the trend can be established around the 600K mark over the next few months.”
Elsewhere, a report from the Federal Reserve Bank of Richmond showed that manufacturing activity in the Mid-Atlantic region of the country continued to slow this month, with the composite index plunging from +14.0 to -1.0 in May. This is the largest month-over-month decline in more than a decade and the first negative (contractionary) reading since February. Under the hood, measures of shipments, new orders, total employment, capacity utilization, and hours worked all deteriorated in May but wages held steady. Surveyed producers’ outlooks on business conditions for the six months ahead were largely mixed but capital expenditure plans fell markedly. Overall, this was another disappointing report on regional manufacturing activity released for the month of May which only adds to the uncertainty about whether or not the “industrial recession” in America that started last summer has finally ended.
Sources: Econoday, Bloomberg, Twitter, ZH, U.S. Census Bureau, FRBR, FRBSLPost author: Charles Couch