Friday Economic Snapshot: Mixed bag on housing, production
This week’s financial news is a mixed bag of positive and negative tidbits. Homebuilder confidence is down, but housing starts soared. Unemployment claims are at a 7-year low. Industrial production fell along with homebuilder sentiment, while manufacturers remain upbeat. Germany is once again eyeing stimulus, while surveys out of New England suggest a manufacturing expansion.
Let’s make sense of this disparate data.
The stat that sent the Dow Jones Industrial Average into the basement on Thursday, the National Association of Home Builders reported that the housing market index fell one point to 45 in May, from 46 in April.
Builder confidence for newly built, single-family homes in May reflects builders waiting for consumers to feel more secure about their own finances, which NAHB’s Chief Economist David Crowe surmised will improve once job growth becomes more consistent.
Housing starts, on the other hand, reignited some confidence on Friday, with the Census Bureau reporting April starts were at a seasonally adjusted rate of 1,072,000. That was up 26.4 percent from April 2013 and up 13.2 percent from March as warmer weather got building activity going again. February and March numbers were also revised upward.
According to the Federal Reserve’s report on industrial production, nationwide industrial production decreased 0.6 percent in April after rising 1 percent in both February and March.
Utility output dropped 5.3 percent, while mining production increased 1.4 percent. Total industrial production was 3.5 percent above its level from last year. The total industrial capacity utilization rate decreased 0.7 percentage points — 1.5 percentage points below the average from 1972 to 2013.
For the week ending May 10, seasonally adjusted initial unemployment claims came in at 297,000. This is a decrease of 24,000 from the previous week, and the lowest level for initial claims since May 12, 2007. This puts the 4-week moving average at 323,250, a decrease of 2,000 from the previous week’s figure.
All things considered, American economic fundamentals remain healthy even as the widely predicted strong growth of 2014 hasn’t arrived — or arrived on time.