NAM: Monday Economic Report
New housing starts pulled back from the fastest pace since July 2006, falling 9.5% from an annualized 1,733,000 units in March to 1,569,000 units in April, with rising construction costs and difficulties in finding talent likely taking a toll, particularly in the single-family market. Yet, residential activity continues to be a strength in the economy overall, and builders remain optimistic about growth over the coming months.
Indeed, the housing permits data—a proxy of future activity in the sector—are consistent with stronger residential growth moving forward, exceeding 1.7 million units for five straight months and jumping 19.1% since February 2020.
With that said, existing home sales fell for the third consecutive month, down to 5.85 million units at the annual rate, largely on low inventories of homes for sale. The median sales price for existing homes has jumped 19.1% year-over-year, up to $341,600 in April.
Meanwhile, the IHS Markit Flash U.S. Manufacturing PMI rose to an all-time high, buoyed by growth in new orders and exports that were the fastest on record. The service-sector also expanded at a historic pace, with the U.S. economy bouncing back as more Americans get vaccinated and activity accelerating on the lifting of COVID-19 restrictions.
Yet, raw material costs and output prices soared once again at all-time high rates, and IHS Markit survey respondents continued to cite severe supply chain disruptions.
Manufacturing surveys from the New York and Philadelphia Federal Reserve Banks produced similar findings. While manufacturing activity eased in both districts in May, the underlying data and the outlook remained strong overall, even with supply chain disruptions and soaring prices.
Across the Atlantic, Eurozone manufacturing activity also expanded solidly in May, with hiring accelerating at the best pace since February 2018, according to preliminary survey results from IHS Markit. Like the U.S., input costs and product prices soared to new records, and the service sector has bounced back as more virus restrictions are lifted.
Outside the Eurozone, the United Kingdom’s manufacturing sector expanded at rates not seen since January 1992.
Initial unemployment claims fell to 444,000 for the week ending May 15, the lowest since the week of March 14, 2020.
New York created the most net new manufacturing jobs in April. Just five states have produced higher employment in the sector since the pandemic began: Utah, Nevada, Alaska, Nebraska and Montana.