News & Events

Economic Advisor: August 23, 2017
August 23, 2017


 

Home construction suffered an unwelcome drop, while retail sales saw continued strong performance, and layoffs tumbled.

Housing Starts

Starts on construction of private housing in July hit a slump, falling to an annual rate of 1.155 million, which was 4.8 percent lower than June’s pace of 1.213 million, according to last week’s report from the Census Bureau. This marked a three-month low for housing starts, and when compared to the same period last year, it was 5.6 percent lower than July 2016’s rate of 1.223 million.

Starts on single family homes in July fell to an annual rate of 856,000, which was 0.5 percent under June’s rate of 860,000.

Building permits issued for the construction of private housing issued during July fell to an annual rate of 1.223 million, which was 4.1 percent under June’s pace of of 1.275 million. That said, when compared to a year ago, it was 4.1 percent over July 2016’s rate of 1.175 million.

Permits issued for single-family homes in July hovered at a rate of 811,000, which was unchanged from June’s rate of 811,000.

Retail Sales

Retail sales for July enjoyed a solid gain of 0.6 percent to hit $478.9 billion, according to last week’s report from the Census Bureau. This continued a positive trend for retail sales, with the May 2017 through July 2017 period coming in 3.9 percent over the same period a year ago. Retail sales analysts took this as an indicator that sales for the third quarter would continue to see positive performance.

“American shoppers flocked to the malls in July, suggesting consumers are well-positioned to propel the economy forward in the second half of the year,” BMO Capital Markets Senior Economist Sal Guatieri told the Associated Press. “It should tamp down chatter about the Fed delaying rate hikes until next year.”

Categories that helped drive July’s growth included motor vehicle and parts dealers, which posted a 1.2 percent gain; building material and garden supply dealers, which enjoyed a 1.2 percent increase; department stores, which saw a 1 percent gain; and non-store retailers, such as online outlets and kiosks, which grew 1.3 percent.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending August 12 fell to 232,000, a sizable drop of 12,000 claims from the preceding week’s total of 244,000, according to numbers released last week by the Employment and Training Administration.

Initial jobless claims serve as a good indicator of layoff activity. Last week’s report was comfortably below market expectations of 241,000 claims for the week.

The four-week moving average — regarded as a more reliable measure of initial jobless claims — notched down to 240,500 claims, a drop of 500 claims from the prior week’s average of 241,000. This was the 128th week in which initial claims were below the 300,000-claim level, which economists consider is an indicator of a growing job market.

This week, we can expect:

 

  • Wednesday — New home sales for July from the Census Bureau.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; Existing home sales for July from the National Association of Realtors.
  • Friday — Durable goods orders for July from the Census Bureau.

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