Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020823a.jpg" width="353">
The Federal Reserve Survey of Senior Loan Officers indicated that lending standards to both large and small firms have eased.
In the latest survey, 21.4% of banks tightened lending standards to large firms versus nearly 60% that were tightening standards early last year.
To small firms, 5.5% of banks tightened lending standards versus 45.4% that were tightening in early 2001 and 41.8% as recently as early this year.
Spreads on loans to both large and small firms remained relatively high, but also have fallen versus recent highs.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveys/@S5/@S501/@S501.HTM">FRB Senior Loan Officers Survey</a></th>
<th scope="col">3Q02</th>
<th scope="col">2Q02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Banks Tightening Loans to Large Firms</td>
<td>21.4%</td>
<td>24.0%</td>
<td>40.4%</td>
<td>50.5%</td>
<td>28.3%</td>
<td>8.0%</td>
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The Federal Reserve Survey of Senior Loan Officers indicated that lending standards to both large and small firms have eased. In the latest survey, 21.4% of banks tightened lending standards to large firms versus nearly 60% that were [...]

Lending Standards Ease

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Total housing starts increased 5.7% (-0.6% y/y) during April to 1.360 million units (SAAR) after falling 16.8% in March to 1.287 million units, revised from 1.321 million. Starts in February rose a little-revised 12.4% to 1.546 million units. Starts remained 24.6% below the most recent peak of 1.803 million in April 2022. The Action Economics Forecast Survey expected 1.420 million starts in April.

Housing starts by type were mixed last month. Starts of single-family units eased 0.4% (+17.7% y/y) to 1.031 million after declining 8.7% in March to 1.035 million, revised from 1.022 million. They reached a high of 1.286 units in December 2020. Multi-family starts increased 30.6% (-33.1% y/y) in April to 329,000 after falling 38.8% to 252,000 in March, revised from 299,000. They reached a high of 624,000 units in November 2022.

Regional activity was mixed in April. In the Northeast, the level of starts fell 22.6% (-43.8% y/y) to 72,000 units after declining 21.8% in March and 10.5% in February. Starts in the Midwest rose 19.1% (3.4% y/y) to 181,000 following a 36.4% March decline. Starts in the South improved 10.1% (4.9% y/y) to 799,000 after a 15.9% March decline. In the West, starts fell 2.5% (+1.7% y/y) to 308,000 after declining in each of the prior three months.

Building permits declined 3.0% (-2.0% y/y) in April 1.440 million units after falling 5.0% to 1.485 million in March, revised from 1.458 million. It was the lowest level of permits since December 2022. Single-family permits eased 0.8% (+11.4% y/y) to 976,000 in April following a 4.2% March decline and a 0.4% February slip. Multi-family permits weakened 7.4% (-21.9% y/y) to 464,000, after falling 6.5% in March.

The housing starts and permits figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.



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- Single-family starts decline but multi-family surge.
- Starts are mixed throughout the country.
- Building permits fall to lowest level in over one year.


U.S. Housing Starts Rise Modestly in April; Building Permits Fall

Sandy Batten

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Total industrial production was unchanged in April from March and 0.4% lower than a year ago. The previously released 0.4% rise in March was revised down to a meager 0.1% monthly gain. The Action Economics Forecast Survey expected a 0.1% increase in production last month. Manufacturing production slumped 0.3% m/m (-0.5% y/y) after a downwardly revised 0.2% monthly gain in March (initially reported as 0.5%). 

Mining activity declined for the third time in the past four months, falling 0.6% (-1.3% /y) following an upwardly revised 1.1% m/m decline in March (previously -1.4% m/m). Utilities output was the only positive part of industrial activity in April, rising 2.8% m/m (+2.3% y/y) on top of a downwardly revised 1.6% monthly gain in March (previously 2.0% m/m).

Amid the monthly volatility, manufacturing output has been relatively flat over the past nine months. In fact, the index level in April was 99.4, exactly the same as in August 2023. The manufacturing sector has been one of the most adversely affected by the Fed’s interest rate hikes. Since April 2022 (just after the Fed initiated it rate hikes in March 2022), manufacturing output has fallen 1.4%. Within the manufacturing sector in April, durable goods production fell 0.5% m/m, its first monthly decline in three months, led by a 2.0% m/m decline in motor vehicle production and a 1.9% m/m drop in the production of electrical equipment and appliances. Production of nondurable goods edged down 0.1% m/m in April following a 0.2% monthly increase in March. Production of selected high-technology industries increased 1.0% m/m. By contrast, petroleum and coal products output slumped 4.4%m/m, the first monthly decline in three months.

Manufacturing output excluding motor vehicles slipped 01% m/m in April after being unchanged in March. Manufacturing excluding selected high-tech industries fell 0.3% m/m in April versus a 0.1% monthly gain in March. Manufacturing output excluding both selected high-tech industries and motor vehicles decreased 0.2% m/m, its sixth monthly decline in the past seven months. Production of consumer goods inched up 0.1% m/m in April following a 0.5% monthly gain in March. Output of business equipment fell 0.5% m/m on top of a 0.2% monthly decline in March. 

Production of construction supplies fell 1.0% m/m in April, the sixth monthly decline in the past seven months. Materials output edged up 0.1% m/m in April, just offsetting a 0.1% m/m decline in March.

Total capacity utilization slipped to 78.4% in April from a slightly upward revised 78.5% in March (previously 78.4%). The April reading was exactly as expected by the Actions Economics Forecast Survey. The capacity utilization rate for manufacturing fell significantly to 76.9% from 77.2%. By contrast, the capacity rate for utilities rose to 71.0 from 69.2.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.



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- IP was unchanged in April with manufacturing falling 0.3% m/m
- Manufacturing decline led by 2.0% m/m drop in motor vehicle output
- Mining fell for the third month of the past four
- Capacity utilization slipped to 78.4%


U.S. Industrial Production Unchanged in April

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Import prices for all goods rose 0.9% (NSA) in April after a 0.6% March gain, revised from 0.4%, and a 0.2% February increase, according to the Bureau of Labor Statistics. A 0.2% April rise had been expected in the Action Economics Forecast Survey. The y/y change of 1.1% followed 12-month price declines all through 2023. 

Export prices increased 0.5% in April following a 0.1% March uptick, revised from 0.3%, and a minimally revised 0.7% February rise. A 0.2% price gain had been expected. These gains also followed a 0.7% January increase. The 1.0% y/y decline compared to an 11.8% y/y drop in June of last year. 

The monthly rise in April import prices was led by a 2.9% increase (5.2% y/y) in imported petroleum prices after they surged 6.7% in March. The April increase was the fourth consecutive monthly gain. The increase in imported petroleum costs was accompanied by a 9.2% decline in natural gas prices, off 42.5% y/y. Nonfuel import prices rose 0.7% (0.9% y/y) after a 0.2% March increase. Import prices for foods, feeds & beverages strengthened 1.7% (6.8% y/y), up for the fourth consecutive month. Motor vehicle & parts prices increased 0.3% (2.6% y/y) after a 0.2% rise. Capital goods prices edged 0.1% higher (-0.1% y/y) after a 0.2% decline while nonauto consumer goods prices also rose 0.1% (0.5% y/y) after falling 0.3% in March. 

The increase in April export prices included a 0.9% decline (-10.2% y/y) in agricultural export prices, which added to a 1.3% March drop . Nonagricultural export prices rose 0.7% (0.1% y/y), the fourth straight monthly gain. Export prices of industrial supplies & materials rose 1.0% (-1.7% y/y), the fourth straight month of firm gain. Automotive vehicles & parts export prices strengthened 0.8% (4.0% y/y) after easing 0.1% in March. Capital goods prices rose 0.4% (1.8% y/y) after edging 0.1% higher. A 0.1% uptick (-1.3% y/y) in nonauto consumer goods prices followed a 0.4% March rise. Foods, feeds & beverage prices were off 0.7% last month (-10.6% y/y) after falling 1.6% in March. 

The import and export price series can be found in Haver’s **USECON** database. Detailed figures are available in the **USINT** database. The expectations figure from the Action Economics Forecast Survey is in the **AS1REPNA** database. 


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- Import prices rise for fourth consecutive month.
- Excluding fuels, import prices edge up for sixth straight month.
- Export price gain improves. 


U.S. Import & Export Prices Strengthen in April

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The Federal Reserve Bank of Philadelphia reported in its May survey of manufacturing activity that the Current Activity Diffusion Index fell to 4.5 this month from 15.5 in April. The Action Economics Forecast Survey had anticipated a decline to 5.0. The Philly Fed survey responses were collected from May 6 to May 13. More than 29% of the firms reported increases in general activity this month (down from 38% last month), while 25% reported decreases (up from 22%); 46% reported no change (up from 40%).

The headline index reflects the answer to a single question on the state of economic activity. Haver Analytics calculates a composite index along the lines of the ISM PMI. That calculated index fell to 46.4 in May from 49.8 in April. This indicates that even though the headline index was above zero, the components pointed to a weaker Philly Fed district manufacturing sector.

The decline in May was led by significant weakness in shipments and orders. The shipments subindex plummeted to -1.2 in May from 19.1 in April while the shipments subindex fell markedly to -7.9 from 12.2. The employment subindex rose slightly in May but remained in negative territory at -7.9. This is the seventh consecutive month that the employment index has been negative, pointing to an ongoing decline in employment. Two-thirds of the firms reported no change in employment levels this month, while the share of firms reporting decreases (20%) exceeded the share reporting increases (12%).

On balance, the firms continued to report overall increases in prices. After rising 19 points last month, the prices paid index declined 4 points to 18.7 in May. Almost 19% of the firms reported increases in input prices, while none reported decreases. The current prices received index ticked up 1 point to 6.6. Almost 13% of the firms reported increases in prices received for their own goods while 6% reported decreases. 

Expectations for business conditions in the next six months deteriorated slightly in May but remained elevated. The May reading was 32.4 versus 34.3 in April and 38.6 in March.

The indexes in this report are diffusion indexes and measure the percentage of respondents indicating an increase minus the percentage indicating a decrease. The Philadelphia Fed data can be found in Haver’s **SURVEYS** database. The expectations figure is from the Action Economics Forecast Survey in **AS1REPNA**.



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- Even with the May decline, the index remains in positive territory, pointing to expansion
- However, both shipments and orders subindexes fell markedly and more worryingly into contraction territory
- The employment subindex rose slightly but remained negative
- Expectations decline slightly but remain elevated


Philly Fed Manufacturing Index Falls in May