News & Events

Economic Advisor: May 24, 2017
May 24, 2017


 

Housing starts declined for another month, while layoffs saw better than expected performance, and industrial production hit its highest point in three years.

Housing Starts

Building permits issued for the construction of private housing during April fell to an annual rate of 1.22 million, which was down 2.5 percent from March’s rate of 1.26 million, the Census Bureau and Department of Housing and Urban Development jointly reported last week. Permits issued for construction of single-family homes fell to a rate of 789,000, which was 4.5 percent below March’s pace of 826,000.

Construction starts on private housing in April dropped to an annual rate of 1.17 million, which was 2.6 percent below March’s rate of 1.2 million. Starts on single-family homes in April bucked the trend and rose to a rate of 835,000, which was 0.4 percent higher than March’s rate of 832,000.

While this was the second month in a row in which housing starts and building permits were down, JPMorgan Economist Daniel Silver said housing market watchers shouldn’t draw overly pessimistic conclusions.

“We should keep in mind that several other housing indicators have been upbeat lately and also that we previously have seen some temporary soft patches in the permits data that did not derail the housing recovery,” Silver told the New York Times.

Initial Jobless Claims

First time claims for unemployment benefits filed by the newly unemployed during the week ending May 13 dropped to 232,000, a decline of 4,000 claims from the preceding week’s total of 236,000, the Employment and Training Administration Reported last week. This exceeded market expectations, which had predicted claims would total 240,000.

The four-week moving average — considered a more stable measure of initial jobless claims — was 240,750 claims, a drop of 2,750 from the previous week’s average of 243,500. This marked the 115th week that initial claims have fallen below the 300,000-claim level, which economists consider an indicator of a growing job market.

Industrial Production

Industrial production, the measure of all output from mining, utilities and manufacturing, grew 1 percent in April for the third consecutive monthly gain, and its largest gain since February 2014, according to the Federal Reserve. Manufacturing output grew 1 percent, mining advanced 1.2 percent and utilities expanded 0.7 percent.

Capacity utilization — the measure of how well industrial output is performing in relation to how well it could be doing — for the industrial sector grew 0.6 percentage points in April to hit 76.7 percent. This was 3.2 percentage points down from its long-run average, which runs 1972 to 2016.

This week, we can expect:

  • Tuesday — New home sales for April from the Census Bureau.
  • Wednesday — Existing-home sales for April from the National Association of Realtors.
  • Thursday — Initial Jobless Claims for last week from the Employment and Training Administration.
  • Friday — Consumer sentiment for April from the University of Michigan Surveys of Consumers; durable goods orders for April from the Census Bureau.

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