NAM: Monday Economic Report
The IHS Markit Flash U.S. Manufacturing PMI expanded at a record pace in April, buoyed by new orders growth that was the best since April 2010 and by exports rising at an all-time high for the series. Output and hiring strengthened for the month, but lingering supply chain disruptions in the sector limited production growth. Yet, raw material costs soared once again, growing at the fastest rate since the question was added in May 2007.
According to the Kansas City Federal Reserve Bank, manufacturing activity expanded at the fastest pace in the survey’s history, which dates to July 2001. While manufacturers in the district remain very upbeat in their outlook, 60% of respondents cited supply chain issues and the lack of qualified workers as their biggest risks to growth over the next year.
The good news was not limited to U.S. manufacturing. There were also all-time highs reported for the U.S. services sector and for manufacturing in the Eurozone , according to preliminary survey data from IHS Markit. Outside the Eurozone, the United Kingdom’s manufacturing sector expanded at rates not seen since July 1994.
The housing market data released last week provided mixed results. On the one hand, new home sales rebounded strongly in March, with single-family activity jumping to 1,021,000 units at the annual rate, the best reading since August 2006. Inventories of new homes for sales remain just shy of all-time lows.
At the same time, existing home sales fell for the second straight month in March, with affordability issues remaining a significant challenge. Inventories are also near historic lows for existing home sales, which is also dampening growth in the market. Despite the weaker activity, the housing market remains a bright spot in the economy, and existing home sales have risen 5.4% over the past 13 months.
One thing that should help residential construction activity: the average interest rate on a 30-year fixed-rate mortgage dropped below 3% for the first time in eight weeks, according to Freddie Mac, at 2.97% last week.
Initial unemployment claims totaled 547,000 for the week ending April 17, the lowest since the week of March 14, 2020. Meanwhile, continuing claims changed little, edging down to 3,674,000 for the week ending April 10.
This will be a busy week on the economic front, with the first reading on GDP for the first quarter, which is likely to jump by an annualized 7–8%. In addition, the Federal Open Market Committee will meet, with observers looking for clues about rising prices and future monetary policy shifts. Other highlights will be updates on consumer confidence, durable goods orders and personal income and spending.