Tom Moeller

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 

 <a href="/comment/181219j.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181219j.png"></a>
 <a href="/comment/181219k.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181219k.png"></a>

The Federal Open Market Committee voted unanimously at
today's meeting to increase the federal funds rate target by 25 basis points to
a range between 2.25% and 2.50%. It was the ninth increase since December 2015.
The action was expected in the Action Economics Forecast Survey.

Most FOMC members indicated an
inclination to raise interest rates in the future. The Fed also indicated that
global economic &amp; financial developments will be monitored closely, while
assessing their implications for the economic outlook, a reference it previously did not make.

As indicated at the last meeting, the FOMC noted &quot;that
the labor market has continued to strengthen and that economic activity has been
rising at a strong rate. Meanwhile, &quot;overall inflation and inflation less food &amp; energy remain near 2
percent. Indicators of longer-term inflation expectations are little changed, on balance.&quot;

Consumer price inflation, both overall and excluding food
&amp; energy, continued to be seen at 2% through 2021. Longer-term inflation
expectations were seen as steady.

The Fed indicated that &quot;risks to the economic outlook
are roughly balanced.&quot;

Updated economic projections were offered at this meeting.
Projections included real GDP growth of 3.0% this year, revised from 3.1%, 2.3%
in 2019, revised from 2.5% and unrevised expectations of 2.0% in 2020 and 1.8%
in 2021. The expected core PCE inflation rate was 1.9% this year and 2.0%
thereafter, revised from 2.1%. The civilian unemployment was seen at 3.7% this
year, followed by 3.5% in 2019, 3.6% in 2020 and 3.8% in 2021, revised from 3.7%.

The press release for today's FOMC meeting can be
found <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20181219a.htm">here</a>.

The Action Economics Forecast Survey can be found in the AS1REPNA
database. Haver's SURVEYS database contains the economic projections from the FOMC.

<a href="/comment/181219l.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181219l.png"></a>
 <a href="/comment/181219m.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181219m.png"></a>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" ></th>
 <th scope="col" >Current</th>
 <th scope="col" >Last</th>
 <th scope="col" >2018</th>
 <th scope="col" >2017</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Federal Funds Rate Target</td>
 <td >2.25% - 2.50%</td>
 <td >2.00% - 2.25%</td>
 <td >1.82%</td>
 <td >1.00%</td>
 <td >0.40%</td>
 <td >0.13%</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The Federal Open Market Committee voted unanimously at today's meeting to increase the federal funds rate target by 25 basis points to a range between 2.25% and 2.50%. It was the ninth increase since December 2015. The action was [...]

FOMC Hikes Interest Rates

Robert Brusca

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>

	 
 
 
 
 

<a href="/comment/181219e.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181219e.png" align="left"></a>
Japan's trade trends continue to sour with a widening deficit, weakening exports and strong imports. Year-on-year goods exports are only technically rising with a ‘gain' of 0.2% over 12 months, hardly more than zero. Imports of goods, however, are up by 13.4% over 12 months. These trends, of course, are expanding Japan's trade deficit again.

This is mainly an issue of fading global growth and strong commodity prices as changes in competitiveness and in exchange rates have been small. The yen vs. the dollar has fallen by 0.5% over 12 months, a negligible change in value. The broad yen (the yen's value assessed and trade weighted vs. a large basket of currencies) has risen by 1.5%, also a negligible change over 12 months.

Japan's exports are stuck because global demand is weak and weakening. Japan's two main markets are the United States and China. China is slowing and being affected by the U.S.-China trade war even though that ‘war' has been put on hold. The U.S. is growing better than China (at least relative to its trend), but the U.S. has also showed signs of slowing down.

Not only have overall Japan trade flows become skewed, but Japan's imports of motor vehicles have sped up and its exports of motor vehicles have slowed and are declining. This is a new trend since over the previous 12 months Japan's exports of vehicles showed expansion but its imports are now at high growth rates for two years running.

Prices and volumes 
Underlying these nominal trade flows are some interesting trends in prices and trade volumes. Over the past year, Japan's export prices are up by 0.5% while export volumes are off by 0.3%. On the face of it, that looks like weak demand. Demand is weak in volume terms and so weak that substantial price gains are not sustainable. It contrasts sharply with imports where prices are up by 9.4% over 12 months and import volumes are up by 3.7%. And we know that demand in Japan has not picked up substantially on this period. But energy prices have been high and only recently have begun to weaken. Japan's trade picture should improve as weaker prices for energy imports filter through the trade process.

U.S. rate hike and beyond 
Japan like other countries has ‘skin in the game' over the U.S. monetary policy decision today. If the Fed does go ahead with a rate hike, there could be several effects in train as a result. Higher rates will act (moderately) to slow growth; they could help to push the dollar to a stronger level and that could reduce commodity prices that in turn could bring pressure to bear on developing economies that depend on the export of commodities to earn foreign exchange. So a rate hike from the Fed could work its way through various sources and have a chilling impact on global growth. Add to that any fallout from trade wars or from the Brexit process which is looking clearly like a case of the best laid plans and attention gone to pot.

Global trends 
Global growth is being challenged in many ways. The U.S. is stirring the pot trying to create better opportunities for itself rather than to allow old Post-War relationships to govern trade relations some 60 to 70 years on. Preferences that the U.S. accorded to trade partners in the Post-War period are no longer suitable to the economics of the day. Germany gets preferences, and has a security blanket thrown over it at mostly a cost to the U.S. tax payer. Meanwhile, the U.S. runs large fiscal deficits and has a structural current account deficit while Germany has a fiscal surplus and the highest ratio of current account surplus to GDP among major trading nations. Clearly, circumstances have evolved that are out of step with the times.

Post Post-War geopolitics 
Japan is feeling pressure from Russia that is taking a page out of ‘The Book of China' and is beefing up bases on islands that are claimed by both Russia and Japan. Japan sees threats around it from a more aggressive China as well as Russia and is planning to beef up its air force. In the Post-War period, both Japan and Germany benefited from a protective stance of the U.S. that freed their resources to be wholly devoted to the economy recovery and growth. The need for those special arrangements has passed, but there is no consensus over what happens next. As a result, geopolitical alliances are in flux. And these sorts of fundamental relationship shifts have also important economic consequences. I find it odd that the U.K. continues to provide military support to Europe despite the EU's stonewalling behavior and less than generous offer to the U.K. over Brexit.

The path ahead 
The U.S. and China are planning more trade talks early next year. The U.S. and the EU have talks percolating that we do not hear much about. There are still ways in which trade conflicts can be resolved or can pop up to become a second wave of problems that global growth will have to deal with again. A second wave would probably be more than global growth could bear up under. Trade policy remains something to watch very closely and to be kept right there on the front burner where it can be monitored.


<img border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181219.png" width="660" height="500"></html>

Japan's trade trends continue to sour with a widening deficit, weakening exports and strong imports. Year-on-year goods exports are only technically rising with a ‘gain' of 0.2% over 12 months, hardly more than zero. Imports of goods, [...]

Japan's Trade Trends Sour

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 

 <a href="/comment/181219f.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181219f.png"></a>
 <a href="/comment/181219g.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181219g.png"></a>

The National Association of Realtors reported that sales of
existing homes in November rose 1.9% to 5.320 million units (SAAR). The 7.0% y/y
decline was, however, the largest since May 2011. The latest increase followed
an unrevised 1.4% gain during October. The Action Economics Forecast Survey
expected sales of 5.20 million units.

The median price of all existing homes sold improved 1.0%
(4.2% y/y) last month to $257,700 following four straight months of decline.
Prices hit a record $273,800 in June but are 4.2% higher during the last twelve
months. The average sales price improved 1.1% (5.0% y/y) to $260,500.

The rise in November home sales spread through most of
the country. Sales in the Northeast strengthened 7.2% (-2.6% y/y) to 740,000
units, the highest level since December. Sales in the Midwest gained 5.5% (-4.3%
y/y) to 1.34 million units, the highest level in twelve months. In the South,
sales improved 2.3% (-5.6% y/y) to 2.22 million units. Wildfires may be
responsible for the 6.3% decline in sales in the West (-15.4% y/y) to 1.04
million units. Sales were 18.1% below the recent peak during February of this year.

Sales of existing single-family homes also rose 1.9% (-6.7%
y/y) to 4.71 million units. Sales sof condos and co-ops improved 1.7% (-9.0%
y/y) to 610,000 units, the highest level in five months.

The number of homes on the market fell for the fifth
consecutive month, but remained up 4.2% y/y. The months' supply of homes on the
market declined to 3.9, the least since March.

The data on existing home sales, prices and affordability are
compiled by the National Association of Realtors and can be found in Haver's USECON
database. The regional price, affordability and inventory data are available in
the REALTOR database. The expectations figure is from the Action
Economics Forecast Survey, reported in the AS1REPNA database.

<a href="/comment/181219h.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181219h.png"></a>
 <a href="/comment/181219i.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181219i.png"></a>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Existing Home Sales (SAAR,
 000s)</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Y/Y %</th>
 <th scope="col" >2017</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td >5,320</td>
 <td >5,220</td>
 <td >5,150</td>
 <td >-7.0</td>
 <td >5,536</td>
 <td >5,441</td>
 <td >5,228</td>
 </tr>
 <tr class="even">
 <td class="firstcol" >&nbsp;&nbsp; Northeast</td>
 <td >740</td>
 <td >690</td>
 <td >680</td>
 <td >-2.6</td>
 <td >737</td>
 <td >735</td>
 <td >684</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Midwest</td>
 <td >1,340</td>
 <td >1,270</td>
 <td >1,280</td>
 <td >-4.3</td>
 <td >1,304</td>
 <td >1,298</td>
 <td >1,231</td>
 </tr>
 <tr class="even">
 <td class="firstcol" >&nbsp;&nbsp; South</td>
 <td >2,200</td>
 <td >2,150</td>
 <td >2,110</td>
 <td >-5.6</td>
 <td >2,270</td>
 <td >2,217</td>
 <td >2,147</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; West</td>
 <td >1,040</td>
 <td >1,110</td>
 <td >1,080</td>
 <td >-15.4</td>
 <td >1,225</td>
 <td >1,192</td>
 <td >1,167</td>
 </tr>
 <tr class="even">
 <td class="firstcol" >Single-Family</td>
 <td >4,710</td>
 <td >4,620</td>
 <td >4,580</td>
 <td >-6.7</td>
 <td >4,910</td>
 <td >4,825</td>
 <td >4,623</td>
 </tr>
 <tr>
 <td class="firstcol" >Median Price Total ($, NSA)</td>
 <td >257,700</td>
 <td >255,100</td>
 <td >256,900</td>
 <td >4.2</td>
 <td >245,950</td>
 <td >232,067</td>
 <td >219,867</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The National Association of Realtors reported that sales of existing homes in November rose 1.9% to 5.320 million units (SAAR). The 7.0% y/y decline was, however, the largest since May 2011. The latest increase followed an unrevised [...]

U.S. Existing Home Sales Increase

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 

 <a href="/comment/181219a.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181219a.png"></a>
 <a href="/comment/181219b.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181219b.png"></a>

The U.S. current account deficit widened to $124.8 billion
during Q3'18 from $101.2 billion in Q2. It was the largest quarterly deficit since
Q4'08 and compared to $123.4 billion expected in the Action Economics Forecast
Survey. As a percent of GDP, the deficit deepened to 2.4% from 2.0% in Q2.

The larger deficit last quarter was due to a record $227.0
billion shortfall on goods trade. Goods exports declined 1.8% (+8.8% y/y), while
goods imports increased 2.6% (11.0% y/y). It was the first quarterly decline in goods
exports since Q4'16.

The surplus on services trade held fairly steady at a record
$68.4 billion. Services exports rose 0.9% after a slight decline. Telecommunications, computer
&amp; information services exports gained 1.7% (0.7% y/y) after a 2.6%
shortfall. Exports of intellectual property rights rebounded 1.9% (2.3% y/y) after
declining 3.5% while travel exports improved a steady 0.3% (1.6% y/y). Services imports
gained 1.4%, following two quarters of decline. Charges for intellectual property rebounded 1.8% (1.1% y/y)
after a 6.3% decline and travel imports increased 1.5% (6.9% y/y).
Telecommunications, computer &amp; information services imports rose 0.4% (-1.9%
y/y) following two consecutive quarters of decline.

The surplus on primary income narrowed to $59.4 billion, off
modestly versus the record high reached in Q4'17. The deficit on secondary income
narrowed significantly to $25.6 billion and was the smallest since Q2'15.

From the capital account, the balance on foreign direct
investment improved to a surplus of $76.8 billion following two quarters of
deficit, which were unprecedented. Surpluses have been the norm.

Balance of Payments data are in Haver's USINT
database, with summaries available in USECON. The expectations figure is
in the AS1REPNA database.

<a href="/comment/181219c.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181219c.png"></a>
 <a href="/comment/181219d.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181219d.png"></a>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >US Balance of Payments
 SA</th>
 <th scope="col" >Q3'18</th>
 <th scope="col" >Q2'18</th>
 <th scope="col" >Q1'18</th>
 <th scope="col" >2017</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Current Account Balance ($ Billion)</td>
 <td >-124.8</td>
 <td >-101.2</td>
 <td >-121.7</td>
 <td >-449.1</td>
 <td >-432.9</td>
 <td >-409.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Deficit % of GDP</td>
 <td >-2.4</td>
 <td >-2.0</td>
 <td >-2.4</td>
 <td >-2.3</td>
 <td >-2.3</td>
 <td >-2.2</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Balance on Goods ($ Billion)</td>
 <td >-227.0</td>
 <td >-203.1</td>
 <td >-220.8</td>
 <td >-807.5</td>
 <td >-751.1</td>
 <td >-761.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Exports</td>
 <td >-1.8%</td>
 <td >4.4%</td>
 <td >2.4%</td>
 <td >6.6%</td>
 <td >-3.6%</td>
 <td >-7.6%</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Imports</td>
 <td >2.6%</td>
 <td >0.0%</td>
 <td >2.9%</td>
 <td >6.9%</td>
 <td >-2.9%</td>
 <td >-4.7%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Balance on Services ($ Billion)</td>
 <td >68.4</td>
 <td >68.5</td>
 <td >66.8</td>
 <td >255.2</td>
 <td >249.1</td>
 <td >263.3</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Exports</td>
 <td >0.9%</td>
 <td >-0.1%</td>
 <td >1.0%</td>
 <td >5.1%</td>
 <td >0.5%</td>
 <td >1.9%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Imports</td>
 <td >1.4%</td>
 <td >-1.3%</td>
 <td >-0.2%</td>
 <td >6.4%</td>
 <td >3.6%</td>
 <td >2.3%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Balance on Primary Income ($
 Billion)</td>
 <td >59.4</td>
 <td >62.3</td>
 <td >61.2</td>
 <td >221.7</td>
 <td >193.0</td>
 <td >203.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Balance on Secondary Income ($
 Billion)</td>
 <td >-25.6</td>
 <td >-29.0</td>
 <td >-28.9</td>
 <td >-118.6</td>
 <td >-123.9</td>
 <td >-112.8</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The U.S. current account deficit widened to $124.8 billion during Q3'18 from $101.2 billion in Q2. It was the largest quarterly deficit since Q4'08 and compared to $123.4 billion expected in the Action Economics Forecast Survey. As a [...]

U.S. Current Account Deficit Deepens

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>

	 
	 Should We Worry? No...But Do Pay Attention
 
 
 
 

<a href="/comment/181218e.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181218e.png" align="left"></a>
The widely watched German IFO gauge weakened noticeably in December. Most IFO readings deteriorated. The exceptions are easier to denote than listing the ones that obeyed the rule. Construction overall and current conditions were flat or higher in December. And all three wholesaling metrics improved. Everything else crashed and burned in December.

Business climate- still overcast 
The climate assessment is varied in December. While the rank standings on the longer timeline are mostly very firm-to-strong. There is an exception and that comes from overall expectations. The current business situation has a stunning 93rd percentile standing on the long timeline, but expectations have a disturbing 38th percentile standing on that same timeline. Switching gears to the shorter timeline since January 2014, we find that the all-sector assessment for climate falls to its 55th percentile from 84.8%. Manufacturing has a 38th percentile standing and retailing has a 28th percentile standing; both of these are unnerving. Wholesaling, with a 46.7 percentile standing, is below its median (for this period). Only construction is strong on the short timeline with a 93.3 percentile standing. Expectations on the short timeline are exceptionally low.

Outlook is shaky; divided: expectations 
Despite the improvement in wholesaling, the sector joins retailing, and manufacturing with a negative expectations reading. Only construction has a positive sector expectation reading; even so, the construction metric deteriorated in December. The queue standings or rank standing metrics for expectations show weak readings for everything except construction. On the full period (to December 1991), the all-sector ranking is in its 38th percentile. But evaluated vs. readings back to January 2014, the all-sector standing is in its 6.7 percentile, weaker less 7% of the time! To put this in context, the chart shows that the climate readings have mostly been rising during this shorter period; thus, making it a tougher standard for comparison. In particular, there are no low 'lows' since there is no recession since 2014.

Here we want to make both points. (1) That sector indexes are quite weak by the standards we have been used to since 2014- about the last five years and the period for which readily available PMI data from Markit can be assessed. However, on a broader timeline (back to December 1991), the readings are still modest but not nearly as worrisome- at least in most cases. The full period 38.5 percentile standing for all sectors is below its median (of 50) by quite a large mark. Manufacturing has a 30th percentile standing, also quite weak. But wholesaling, despite absolute weak diffusion readings, is still above its long-term median at a standing of 51.1%. And retailing, while below its median standing at its 47.3 percentile, is close to its median- putting it close to 'normal.' Still, most of this is not really good only the construction sector to have been good and stable, resisting for the most part weakness elsewhere in the shorter period. In the short period, all expectations ranking except for construction are below their 10th percentile.

Current conditions are 'firm' 
Current conditions show a differing dilemma with still quite strong and solid rank standings on the long period and much more modest conditions when compared to the environment since January 2014- modest but firm. Construction is still strong regardless of the timeline. But on the shorter timeline, sectors are all evaluated with standings somewhere in their respective 60th percentile decile (60% to 69.9%). And this is a moderate reading that is 10 to 20 percentile points above its median in terms of the standing, but not as solid as readings in the 70th percentile decile or as strong as readings in the 80th or 90th deciles. But it is not a threatening reading and is at some low point on the Goldilocks scale. Retailing and manufacturing, two very key sectors, have the weakest current standings (61.7%, both) but are still moderate.

RELAX!! 
The German data and EMU data have been weakening and they are only very weak by recent standards. There has been a substantial revival in the works and analysis must allow for growth to ebb and flow. Getting overly excited about every deceleration in growth and enamored of each acceleration is not a good idea. At some point, growth comes back to average because that's what 'average' is (the fancy term is 'mean reversion'). The two columns in red on the far right in the IFO table are meant to underscore just that. The mean since 2014 is one set of numbers for these indicators while the mean since 1991 is another set of numbers. And since these are based on diffusion metrics, there is no sense that there has been any shift in the underlying trends. Diffusion simply tells the proportion of respondents where activity is expanding vs. contracting (or expected to). The percentile standings I calculate simple resolve those data into rankings to make sense of them and to allow various diffusion readings to be compared.


Various IFO metrics – nearly all show backtracking 

<img border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181218.png" width="660" height="620">


There is a German deceleration in place. And there are many risk factors in the outlook as we have enumerated in recent reports. Risk is in the air. So is slowdown. But it is because of market reactions falling stocks and a flattening U.S. yield curve that this 'slowdown' is accompanied also with concern. And there is the uncertainty of policy, especially on trade. I am not arguing to make the theme song 'Don't worry, be happy' just to put the risk and the evaluation of conditions in their proper perspective. I hope the rankings above help you to do just that.

In the U.S., the Fed is still data-dependent. Is the Fed prepared to do that? Is it prepared to put risks in their proper perspectives or is it on auto pilot?




</html>

The widely watched German IFO gauge weakened noticeably in December. Most IFO readings deteriorated. The exceptions are easier to denote than listing the ones that obeyed the rule. Construction overall and current conditions were flat [...]

German IFO Gauge Is Weaker Than Expected in December

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 

<a href="/comment/181218f.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181218f.png"></a>
 <a href="/comment/181218g.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181218g.png"></a>

Gasoline prices fell to an average $2.37 per gallon (-3.3%
y/y) from $2.42 last week. Prices have fallen from an average high of $2.90
early last month to currently the lowest level since August 2017. Haver
Analytics constructs factors to adjust for the marked seasonal variation in
prices. The seasonally-adjusted gasoline price fell three cents last week to $2.50 per gallon.

West Texas Intermediate crude oil prices eased to an
average of $51.53 per barrel (-9.9% y/y) after rising to $52.67 in the prior
week. Prices have declined steadily since the peak of $75.11 in early-October.
Yesterday, prices declined to $49.88 per barrel. Brent crude oil prices fell
last week to an average $60.34 per barrel (-1.5% y/y) from $61.47 during the
prior week. Yesterday, prices were $59.02 per barrel.

Natural gas prices fell last week at an average $4.33/mmbtu
(+56.3% y/y). Prices were up from a low of $2.52 last February. The price was $3.80 yesterday.

During the latest four weeks, gasoline demand held
steady y/y; total petroleum product demand rose 5.5% y/y. Gasoline
inventories increased 0.8% y/y, but inventories of all petroleum products
eased 1.1% y/y. Crude oil input to refineries rose 2.0% y/y in the last four weeks.

These data are reported by the U.S. Department of Energy. The
price data can be found in Haver's WEEKLY and DAILY databases.
Greater detail on prices, as well as the demand, production and inventory data,
along with regional breakdowns, are in OILWKLY.

<a href="/comment/181218h.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181218h.png"></a>
 <a href="/comment/181218i.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181218i.png"></a>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Weekly Energy Prices</th>
 <th scope="col" >12/17/18</th>
 <th scope="col" >12/10/18</th>
 <th scope="col" >12/03/18</th>
 <th scope="col" >Y/Y %</th>
 <th scope="col" >2017</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Retail Gasoline ($ per Gallon Regular,
 Monday Price)</td>
 <td >2.37</td>
 <td >2.42</td>
 <td >2.45</td>
 <td >-3.3</td>
 <td >2.47</td>
 <td >2.31</td>
 <td >2.03</td>
 </tr>
 <tr>
 <td class="firstcol" >Light Sweet Crude Oil, WTI ($ per bbl,
 Previous Week's Average)</td>
 <td >51.53</td>
 <td >52.67</td>
 <td >51.09</td>
 <td >-9.9</td>
 <td >50.87</td>
 <td >43.22</td>
 <td >48.90</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Natural Gas ($/mmbtu, LA, Previous
 Week's Average)</td>
 <td >4.33</td>
 <td >4.49</td>
 <td >4.43</td>
 <td >56.3</td>
 <td >2.96</td>
 <td >2.49</td>
 <td >2.62</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

Gasoline prices fell to an average $2.37 per gallon (-3.3% y/y) from $2.42 last week. Prices have fallen from an average high of $2.90 early last month to currently the lowest level since August 2017. Haver Analytics constructs [...]

U.S. Energy Product Prices Ease

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 

 <a href="/comment/181218a.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181218a.png"></a>
	 <a href="/comment/181218b.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181218b.png"></a>

Total housing starts rose 3.2% (-3.6% y/y) during November to
1.256 million (AR) from 1.217 million in October, revised from 1.228 million.
The level exceeded expectations for 1.230 million starts in the Action Economics Forecast Survey.

A 22.4% rise (21.7% y/y) in starts of multi-family units to
432,000 accounted for last month's gain in the total. It followed a 1.4%
decline. Starts of single-family units fell 4.6% (-13.1% y/y) to 824,000, down
for the third straight month.

Last month's increase in total starts reflected a roughly
one-third improvement, both m/m and y/y, in the Northeast to 124,000 units from
90,000. Starts in the South rose 15.1% (1.3% y/y) to 687,000, an 11-year high.
Countering these increases was a 19.2% decline (-12.4% y/y) in the Midwest to
156,000, which more-than-reversed the rise during October. Housing starts in the
West fell 14.2% (-18.4% y/y) to 289,000, the lowest level since July.

Building permits increased 5.0% (0.4% y/y) to 1.328 million
after a 0.4% slip. Single-family permits edged 0.1% higher (-1.9% y/y) to 848,000
following a 0.8% decline. Permits to build multi-family homes jumped 14.8% (4.6%
y/y) to 480,000 after a 0.5% rise.

The housing starts and permits figures can be found in
Haver's USECON database. The expectations figure is contained in the AS1REPNA database.

<a href="/comment/181218c.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181218c.png"></a>
 <a href="/comment/181218d.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181218d.png"></a>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Housing Starts (000s, SAAR)</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Nov Y/Y %</th>
 <th scope="col" >2017</th>
 <th scope="col" >2016</th>
 <th scope="col" >2015</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total</td>
 <td >1,256</td>
 <td >1,217</td>
 <td >1,237</td>
 <td >-3.6</td>
 <td >1,208</td>
 <td >1,177</td>
 <td >1,107</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Single-Family</td>
 <td >824</td>
 <td >864</td>
 <td >879</td>
 <td >-13.1</td>
 <td >852</td>
 <td >785</td>
 <td >713</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Multi-Family&nbsp;</td>
 <td >432</td>
 <td >353</td>
 <td >358</td>
 <td >21.7</td>
 <td >356</td>
 <td >393</td>
 <td >394</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="8" >Starts By Region</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Northeast</td>
 <td >124</td>
 <td >90</td>
 <td >141</td>
 <td >33.3</td>
 <td >111</td>
 <td >116</td>
 <td >135</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Midwest</td>
 <td >156</td>
 <td >193</td>
 <td >171</td>
 <td >-12.4</td>
 <td >180</td>
 <td >185</td>
 <td >150</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;South</td>
 <td >687</td>
 <td >597</td>
 <td >568</td>
 <td >1.3</td>
 <td >603</td>
 <td >585</td>
 <td >557</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;West</td>
 <td >289</td>
 <td >337</td>
 <td >357</td>
 <td >-18.4</td>
 <td >314</td>
 <td >292</td>
 <td >265</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Building Permits</td>
 <td >1,328</td>
 <td >1,265</td>
 <td >1,270</td>
 <td >0.4</td>
 <td >1,286</td>
 <td >1,206</td>
 <td >1,178</td>
</tr>
 </tbody>
 </table>
 
</body></html>

Total housing starts rose 3.2% (-3.6% y/y) during November to 1.256 million (AR) from 1.217 million in October, revised from 1.228 million. The level exceeded expectations for 1.230 million starts in the Action Economics Forecast [...]

U.S. Housing Starts and Building Permits Recover

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
</head>
<body>
	 
 
 
 

<a href="/comment/181217f.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181217f.png"></a>
 <a href="/comment/181217g.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181217g.png"></a>

The Composite Housing Market Index from the National
Association of Home Builders-Wells Fargo declined to 56 during December, its
lowest level since May 2015. The figure compared to the expansion high of 74 in
December of last year. For the year as a whole the index eased moderately.
Expectations for December had been for an index level of 60 in the Informa
Global Markets Survey. The NAHB figures are seasonally adjusted. During the last
ten years, there has been a 53% correlation between the y/y change in the home
builders index and the y/y change in new home sales.

The index of present sales conditions fell to 61 in December
from 67 during November. It remained down from its peak of 80 last December. The
index of expected conditions in the next six months weakened to 61 this month,
also a twelve-month low. The recent peak in this index was 80 in February.

The index of traffic of prospective buyers eased to 43, the
lowest level in just over three years. The index peaked at 58 in December last year.

Deterioration in the overall index reflected weakness
throughout the country. The index for the Northeast plummeted to 37 from 61 just
two months ago. The index for the Midwest declined to 52, the lowest level since
May 2015. For the South, the index fell to 61 and closed in on a two-year low.
The index for the West held steady m/m at 65 but also was well below the high
reached twelve months ago.

The NAHB has compiled the Housing Market Index since 1985. It
reflects survey questions asking builders to rate market conditions as
&quot;good,&quot; &quot;fair,&quot; &quot;poor&quot; or &quot;very high&quot; to
&quot;very low.&quot; The figure is thus a diffusion index with numerical
results six over 50 indicating a predominance of &quot;good&quot; readings. The
weights assigned to the individual index components are 0.5920 for single-family
detached sales, present time, 0.1358 for single-family detached sales, next
months and 0.2722 for traffic of prospective buyers. The results are included in
Haver's SURVEYS database. The expectations figure is available in Haver's
MMSAMER database.

<a href="/comment/181217h.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181217h.png"></a>
 <a href="/comment/181217i.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/181217i.png"></a>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >National Association of Home
 Builders</th>
 <th scope="col" >Dec</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Dec '17</th>
 <th scope="col" >2018</th>
 <th scope="col" >2017</th>
 <th scope="col" >2016</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Composite Housing Market Index, SA (All
 Good=100)</td>
 <td >56</td>
 <td >60</td>
 <td >68</td>
 <td >74</td>
 <td >67</td>
 <td >68</td>
 <td >61</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Single-Family Sales: Present</td>
 <td >61</td>
 <td >67</td>
 <td >74</td>
 <td >80</td>
 <td >73</td>
 <td >74</td>
 <td >67</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Single-Family Sales: Next Six
 Months</td>
 <td >61</td>
 <td >65</td>
 <td >75</td>
 <td >79</td>
 <td >74</td>
 <td >76</td>
 <td >67</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Traffic of Prospective Buyers</td>
 <td >43</td>
 <td >45</td>
 <td >53</td>
 <td >58</td>
 <td >50</td>
 <td >50</td>
 <td >45</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo declined to 56 during December, its lowest level since May 2015. The figure compared to the expansion high of 74 in December of last year. [...]

U.S. Home Builder Index Weakens Considerably

Latest PMIs show US losing momentum while RoW is gaining momentum

Sticky services prices behind sticky overall PCE inflation

Flash April PMIs point to slower growth in the US but a pickup in Europe and Japan

Outlook strengthens for US while it weakens for other major economies

Crude petroleum prices are having a big impact on inflation expectations

Inflation surprising to upside in the US; by contrast to the downside in the euro area

 Gross Domestic Income is catching up with GDP

FOMC expects GDP growth above trend over the next three years

US core CPI inflation has begun to reaccelerate

Fiscal-policy aided factory building in the U.S. provided an unusually large boost to growth last year

US consumers much more optimistic than those in the Euro area and the UK

  Job openings take a step down in 2024

Fed's super core services inflation measure pushing up core rate

Blue Chip forecasters expect significant monetary easing this year except in Japan

Euro area economy stagnating while US grows above trend

Chinese and Japanese equity markets are diverging markedly

Chinese population declines in 2023 for second consecutive year

Outlook for US GDP growth on the rise; declining in euro area, Japan and China

There are still 1.4 job openings for every unemployed person in the US

US PCE inflation over the past six months has slowed to the Fed's 2% target

FOMC think rate hikes are done and looks for 75bps of decline in 2024

Weaker economic data surprises pushing down US interest rates

Recent disinflation has been widespread across Europe and North America

Recent decline in US inflation expectations helping to lower interest rates

China is losing its luster as foreign direct investment heads out

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

A premier time series data platform for the global strategy, research, and quant communities. 

New York

London

Singapore

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

240517f5.jpg

240517g5.jpg

The U.S. Leading Economic Index fell 0.6% (-5.4% y/y) during April following an unrevised 0.3% March decline, according to a report by The Conference Board. These two changes followed a 0.2% February improvement. A 0.3% April shortfall had been expected in the Action Economics Forecast Survey.

Five of ten components contributed negatively to the overall index in April including the ISM new orders index, building permits, stock prices, the spread between the 10-year Treasury and the Fed funds rate, as well as consumer expectations for business/economic conditions. Initial claims for unemployment insurance and the leading credit index contributed positively. New orders for capital goods and new orders for consumer goods made minimal positive contributions to the index change while the length of the average workweek had no effect on the leading index change.

A 0.2% April increase in the Coincident Economic Index followed a 0.2% March gain, revised from 0.3%. These gains came after a 0.3% February rise. Three of the four components made positive contributions to the coincident index in April, including the changes in personal income less transfers, nonagricultural payroll employment and real manufacturing & trade sales. The change in industrial production had no effect on the coincident indicators.

The Lagging Economic Index rose 0.4% (1.4% y/y) after unrevised stability in March and a 0.2% February increase. Three of the index’s seven components made positive contributions last month including the average duration of unemployment, commercial & industrial loans outstanding and the ratio of consumer credit to income. The six-month change in unit labor costs made a minimally negative contribution while the six-month change in the services CPI, banks’ prime rate and the ratio of business inventories-to-sales were unchanged.

The ratio of the coincident index to the lagging index is also viewed as a leading indicator of economic activity. This measure fell 0.2% in April, following two straight monthly increases. It was 0.8% below its most recent peak in December of last year.

The Conference Board figures are available in Haver's **BCI** database; the components are available there, and most are also in **USECON**. The expectations are in the **AS1REPNA** database. Visit the Conference Board's [website](https://www.conference-board.org/us/) for coverage of leading indicator series from around the world.



240517h5.jpg

240517i5.jpg

- Leading index decline is largest in six months.
- Coincident Indicators continue to increase moderately.
- Lagging index strengthens after holding steady.


U.S. Leading Economic Indicators Fall Sharply in April

240517e.jpg

**EMU Inflation Trends Offer Hope and Hype**- Inflation in the European Monetary Union rose by 0.2% month-to-month in April, the same as in March. Core inflation, however, picked up, rising by 0.4% but that was after being flat in March. The sequential growth rates from 12-months to six-months to three-months show the headline inflation rate at 2.4% over 12-months falling to 2% over 6-months, then rising to a 3% annual rate over three-months. The core rate for the monetary union rose 2.9% over 12-months at a 2.7% annual rate over six-months, it steps up to a 2.8% annual rate over three-months. Headline inflation is resisting moving down to the 2% level consistently while core inflation appears to be stuck just short of 3%. Whether these trends are good enough depends on whether the ECB sees itself implementing precision-guided policy or playing horseshoes and hand grenades.

**Headline Inflation: four largest EMU members**
Statistics for the largest four members of the monetary union show inflation worse in April on balance than for the monetary union as a whole. German inflation rose by 0.8% in April, in France it rose by 0.7%, in Spain at rose by 0.5%, while in Italy it rose by 0.3%. These are month-to-month gains. However, these figures followed either flat or declining inflation (price-) performance in March for each of these four countries. The progression of inflation for Germany, France, Italy, and Spain, however, still shows inflation resisting a consistent move down to 2%. German inflation runs at 2.6% over 12-months steps up to 2.7% over 6-months and reaches a 2.9% annual rate over 3-months. France’s 12-month inflation of 2.4% steps down to 2.2% over 6-months, then rises to a 3.2% annual rate over 3-months. In Italy, headline inflation is 1.1% over 12-months, similarly at a 1% annual rate over 6-months, then rises to a 1.7% annual rate over 3-months. Spain's inflation falls from 3.6% over 12-months to 3.2% over 6-months to 2.3% over 3-months- finally a European Monetary Union large country member with persistently decelerating inflation! On balance Italian inflation over 3-months is under the target that the ECB has for the monetary union as a whole, Spain’s inflation is transitioning from 12-months to 6-months to 3-months down close to the 2% mark, while Germany and France continue to show stubbornly too-high results for their headline inflation rates. All-in-all, that is not a great background to support a rate cut.

**Core inflation and its trends offer hope**
Core inflation rates produce much more beneficial results. Still, in April month-to-month core inflation increases are generally excessive for these four members. But that follows declining inflation – falling prices- for core rates in March. Germany is an exception to this pattern, but it still follows the rule of improvement because its inflation progress is flipped between the two months. Looking at sequential growth rates for core inflation or ex-energy inflation for these large country members, we find that inflation is persistently decelerating from 12-months to 6-months to 3-months for all of them except for France. France shows a pickup in inflation over 3-months compared to 6-months as core inflation rises to a 3-month rate of 2.9% after posting a 2.1% pace over 6-months. The 3-month pace for inflation x-energy for Germany is 2.1%, the core for Italy is at 1.7%, and the core for Spain is at 1.8%. All three-monthly core rates are at the doorstep or within the ECB's target range for headline EMU inflation. France is the exception. The 12-month core inflation rates are all above target but show signs of coming into line; German and French year-over-year inflation rates decline in April compared to March the Italian rate is unchanged year-over-year at 2.3% on the monthly comparison, while only Spain has an acceleration compared to a month ago and that's to a 3.3% rise from 3.1% in March.

**Is it good enough?**
The speed of inflation’s drop- Core inflation rates would seem to build a good enough base for the ECB to move ahead with rate cuts if it decides it wants to go that way. If it wants to be surer and clearer about reducing inflation it will pay more attention to the headline rates that are excessive- especially since no inflation metric is falling particularly fast anymore. The risk over ‘overshooting’ on the downside seems remote. Oil prices as measured by Brent in euros rose by 4.3% month-to-month in April after rising 1.6% in March. However, year-over-year Brent prices are down by 3.3%, so the impulse from oil is mixed across tenors. 

ECB credibility- A different view of reality looks at ECB inflation performance over five-years and finds all the metrics quite unacceptable. Over the last five years the compounded inflation rate for the monetary union is 3.7% and for the core it's 2.8%. For Germany it's 4.1%, for France it's 3.3%, and for Italy and Spain it's 3.4%. The core or X energy inflation rates do not behave much better, Germany is at 3.3% over five years on its core measure, France at 2.7%, Spain at 3%, and Italy at 2.5%. If the ECB is concerned about its credibility, then it's going to want to make sure that it gets inflation down inside of its target soon because the five-year compound inflation rates are so far over their target that clearly a central bank that claims to target 2% inflation cannot look at that five-year record and consider policies to have been a success. 

**Driving the road ahead**- Looking ahead it's very possible that inflation is on a downtrend and that policy is moving inflation in the right direction; the question remains concerns the certainty of that conclusion and the question ‘is inflation moving down fast enough?’  The ECB is going to have to measure the impact on its credibility against its desire to hit its inflation target in the short run and pay some attention to the effect that policy has on economic growth rates in the monetary union. On that score, unemployment rates throughout the European Monetary Union are still extremely low in historic comparisons… but, there has been a new sensitivity across central banks globally as they try to reduce their inflation rates ‘to target levels’ without having much impact on the unemployment rates at all - even though unemployment rates are in many places near some version of historic lows. Time will tell whether this sort of prevarication in inflation fighting that coddles the unemployment rate that is already so low is wise or has turned out to be foolhardy. 


240517.jpg

Europe

EMU Inflation Trends Offer Hope and Hype- Inflation in the European Monetary Union rose by 0.2% month-to-month in April, the same as in March. Core inflation, however, picked up, rising by 0.4% but that was after being flat in March. The sequential growth rates from 12-months to six-months to three-months show the headline inflation rate at 2.4% over 12-months falling to 2% over 6-months, then rising to a 3% annual rate over three-months. The core rate for the monetary union rose 2.9% over 12-months at a 2.7% annual rate over six-months, it steps up to a 2.8% annual rate over three-months. Headline inflation is resisting moving down to the 2% level consistently while core inflation appears to be stuck just short of 3%. Whether these trends are good enough depends on whether the ECB sees itself implementing precision-guided policy or playing horseshoes and hand grenades.

EMU Inflation Holds the line 2% Beckons

240516f4.jpg

240516g4.jpg

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.



240516h4.jpg

240516i4.jpg

- 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

240516r2.jpg

240516s2.jpg

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.



240516t2.jpg

240516u2.jpg

- 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

240516j5.jpg

240516k5.jpg

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. 


240516l5.jpg

240516m5.jpg

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


Economy in Brief: 2018

Jump to: