News & Events

Economic Advisor: April 25, 2018
April 25, 2018


A surge in apartment construction drove starts on new housing construction. Meanwhile, retail sales finally enjoyed some growth and layoffs saw a small dip.

Housing Starts

Despite unseasonably cold weather, home construction enjoyed a shot in the arm. Starts on private housing of all categories grew 1.9 percent in March to hit an annual rate of 1.31 million over February’s pace of 1.29 million, the Census Bureau reported last week. Compared to last year, March’s housing starts were 10.9 percent higher than March 2017’s rate of 1.18 million.

The key driver for the March’s growth? Surprisingly, it was a surge in multi-unit housing. Starts on buildings containing five or more units shot up 16.1 percent to 439,000 from February. Meanwhile, starts on single-family homes fell 3.7 percent in March to an annual rate of 867,000, down from February’s pace of 900,000.

Building permits issued in March grew 2.5 percent to an annual rate of 1.35 million from February’s rate of 1.32 million. Compared to last year, March’s permits were 7.5 percent higher than March 2017’s rate of 1.26 million.

Once again, multi-family housing drove March’s growth increase, with permits issued for housing consisting of five or more units growing 22.9 percent to a rate of 473,000 units. Meanwhile, permits issued for single-family homes dipped 5.5 percent to an annual rate 840,000.

Housing market watchers were left to consider whether or not the growth in nascent apartment construction outpaced starts on single-family homes indicated a slow-down in the housing market. That’s premature. Considering that in February starts on multi-family housing plummeted 28 percent while single-family home starts grew 2.9 percent, it’s clear that a single month doesn’t signal a trend.

Retail Sales

Retail sales grew to $494.6 billion in March, an increase of 0.6 percent over February’s sales to $492 billion, according to last week’s report from the Census Bureau. Compared to the same period last year, March’s sales were 4.5 percent higher than March 2017.

Key drivers for March’s growth were sales at motor vehicle and parts dealers, which grew 2 percent; sales at health and personal care stores, which increased 1.4 percent; non-store retailers, such as e-commerce sites and kiosks, which rose 0.8 percent; and furniture and home furnishing stores, which notched up 0.7 percent.

After three consecutive monthly declines, March’s increase came as welcome news to retailers and economists alike, and hopefully indicates continued growth.

“The somewhat improved performance in March was too late to help the first quarter, but it does set the stage for a marked pickup in real consumer spending in the second quarter,” Amherst Pierpont Securities Chief Economist Stephen Stanley wrote in a public statement.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending April 14 skirted down to 232,000, a dip of 1,000 claims from the preceding week’s total of 233,000, the Employment and Training Administration reported last week. The Administration added that the impacts of hurricanes Harvey, Irma and Maria continued to skew layoffs data.

The four-week moving average — regarded as a more reliable measure of initial jobless claims — notched up to 231,250, a gain of 1,250 claims from the prior week’s average of 230,000. Last week’s report also marked the 163rd week in which initial claims were below the 300,000-claim level, which economists consider an indicator of a growing job market.

This week, we can expect:

  • Monday — Existing home sales for March from the National Association of Realtors.
  • Tuesday — Consumer confidence for April from The Conference Board; new home sales for March from the Census Bureau.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; durable goods orders for March from the Census Bureau.
  • Friday — First quarter gross domestic product from the Bureau of Economic Analysis.

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