NAM: Monday Economic Report
The housing market has emerged as a bright spot in the U.S. economy in recent months. After plummeting dramatically in April to the slowest pace since February 2015, it has been buoyed by low mortgage rates.
New residential construction soared 22.6% from 1,220,000 units at the annual rate in June to 1,496,000 units in July, a five-month high. Single-family housing starts increased for the third straight month from 869,000 units to 940,000 units, the highest reading since February.
Housing permits—a proxy of future activity—also rose sharply, up 18.8% from an annualized 1,258,000 units in June to 1,495,000 units in July, the best rate since January.
Existing home sales jumped 24.7% from 4.70 million units at the annual rate in June to 5.86 million units in July. Single-family and condominium and co-op sales soared 23.9% and 31.8%, respectively.
Over the past 12 months, existing home sales have risen 8.7%, up from 5.39 million units in July 2019. Single-family sales went up 9.8% year-over-year. At the same time, condo/co-op sales were flat with the pace seen one year ago.
The average 30-year fixed-rate mortgage rate was 2.99% last week, remaining below 3% for the fourth straight week. It reached an all-time low of 2.88% for the week of Aug. 6.
Manufacturers continued to expand, building on the rebounds seen since the spring months. However, signs of decelerating growth also emerged in some markets in August.
The IHS Markit Flash U.S. Manufacturing PMI continued to show signs of recovery in August. It notched the best reading since January 2019, with the headline index rising from 50.9 in July to 53.6 in August, led by strength across the board.
Regional surveys from the New York and Philadelphia Federal Reserve Banks each reported slower expansions in activity in August. However, respondents remained upbeat about the next six months.
The IHS Markit Flash Eurozone Manufacturing PMI expanded very modestly for the second straight month, easing slightly in August from July’s pace. Sales and production were up solidly in Germany and—outside the European Union—in the United Kingdom. However, manufacturing activity weakened in France.
Initial unemployment claims rose to 1,106,000 for the week ending Aug. 15. Claims had been at 971,000 for the week ending Aug. 8, falling below 1 million for the first time since mid-March. Meanwhile, continuing claims dropped from 15,480,000 for the week ending Aug. 1 to 14,844,000 for the week ending Aug. 8. As such, 10.2% of the workforce was receiving unemployment insurance in the latest data, down from 10.6% in the previous report.
Michigan created the most net new manufacturing jobs in July, adding 9,400 workers. Despite gains over the past three months, manufacturing employment figures continue to experience sizable declines due to COVID-19.