In May the monthly average value of the U.S. dollar (USD) depreciated versus Canada’s “loonie” (-3.0%) and euro (-1.5%), but appreciated against the Japanese yen (+0.1%). On the broad trade-weighted index basis (goods and services), the USD weakened by 1.3% against a basket of 26 currencies.
The foregoing comments represent the
general economic views and analysis of
Construction
spending during April 2021 was estimated at a seasonally adjusted annual
rate (SAAR) of $1,524.2 billion, 0.2% (±0.8%)* above the revised March estimate
of $1,521.0 billion (originally $1,513.1 billion); consensus expectations
were for +0.6%. The April figure is 9.8% (±1.2%) above the April 2020 SAAR of
$1,387.9 billion; the not-seasonally adjusted YoY change (shown in the table
below) was +9.0%.
During
the first four months of this year, construction spending amounted to $452.3
billion, 5.8% (±1.0%) above the $427.3 billion for the same period in 2020.
* 90% confidence interval includes zero. The U.S. Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.
Private Construction
Spending
on private construction was at a SAAR of $1,180.7 billion, 0.4% (±0.7%)* above
the revised March estimate of $1,175.4 billion (originally $1,169.2 billion):
- Residential. $729.2 billion, +1.0% (±1.3%)*; of which
- Home improvement. $234.5 billion, +0.3% (+11.3% YoY);
- Nonresidential. $451.4 billion in April, -0.5% (±0.7%)*.
Public Construction
Public
construction spending was $343.5 billion, 0.6% (±1.6%)* below the revised March
estimate of $345.6 billion (originally $343.9 billion):
- Educational: $84.8 billion, -0.5% (±1.8%)*;
- Highway: $99.8 billion, +0.6% (±5.6%)*.
Click
here
for a discussion of April’s new residential permits, starts and completions.
Click here
for a discussion of new and existing home sales, inventories and prices.
The foregoing comments represent the
general economic views and analysis of
In
its second estimate of 1Q2021 gross domestic product (GDP), the Bureau of
Economic Analysis (BEA) held the growth rate of the U.S. economy at a
seasonally adjusted and annualized rate (SAAR) of +6.40% (+6.5% expected),
up 0.01 percentage point (PP) from the “advance” estimate (“1Qv1”) and +2.08PP from
4Q2020.
As
with 1Qv1, two groupings of GDP components -- personal consumption expenditures
(PCE) and government consumption expenditures (GCE) -- were the drivers behind
the expansion, whereas private domestic investment (PDI) and net exports (NetX)
made minor negative offsets.
Although
the headline number was unchanged, the underlying line items moved around a
little. As for details:
PCE. Contribution to 1Q headline: +7.40PP; +5.82PP from 4Q and +0.38PP
from 1Qv1. Downward revisions to health care spending (-$26.9 billion, nominal)
were offset by upward revisions to spending on motor vehicles and parts (+$18.8B)
and receipts from sales of goods and services by nonprofit institutions
(+$18.9B) -- which do not have market-derived value.
PDI. Contribution to 1Q headline: -0.82PP; -5.23PP from 4Q but +0.05PP
from 1Qv1. Upward revisions to software (+$12.2B) and residential fixed
investment (+$5.8B) lessened by decline.
NetX. Contribution to 1Q headline: -1.20PP; +0.33PP from 4Q but -0.33PP
from 1Qv1. Goods exports were revised down by -$10.0B, and imports were revised
up by a combined +$4.5B; recall that imports are inversely correlated with the GDP
headline.
GCE. Contribution to 1Q headline: +1.02PP; +1.16PP from 4Q but -0.10PP
from 1Qv1. The downward revision (-$6.5B) was borne almost entirely at the
state and local levels.
The BEA's real final sales of domestic product -- which ignores inventories -- was revised to +9.18% (+0.14PP), a level 6.23PP above the 4Q estimate.
Consumer
Metric Institute’s Rick Davis
summarized the key points of this report as follows:
--
Although there is no material improvement in the headline number, consumer
spending on goods was better than first estimated.
--
Even though household disposable income continues to benefit from federal
relief programs, most of that increase is being pocketed. The jury is still out
on how free spending consumers will be as the post-pandemic normalization
continues into the summer.
“This
is yet another example of when month-to-month data from the BEA would be a vast
improvement over the existing 80+ year old quarter-to-quarter regimen,” Davis
concluded. “Simply stated, revising January through March might be academically
nice, but telling us what was happening in April (or indeed, early May) would
be so much better.”
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
Sales of new
single-family houses in April 2021 were at a seasonally adjusted annual rate
(SAAR) of 863,000 units (957,000 expected).
This is 5.9% (±11.2%)* below the revised March rate of 917,000 units
(previously 1.021 million), but 48.3% (±24.5%) above the April 2020 estimate
of 582,000 units; the not-seasonally adjusted (NSA) year-over-year comparison
(shown in the table above) was +50.0%. For longer-term perspectives, NSA sales
were 37.9% below the “housing bubble” peak but 49.2% above the long-term,
pre-2000 average.
The
median sales price of new houses sold in April jumped ($38,200 or +11.4% MoM)
to $372,400; meanwhile, the average sales price rose to a new record-high $435,400
($34,900 or +8.7% MoM). Starter homes (defined here as those priced below
$200,000) comprised 2.6% of the total sold, down from the year-earlier 11.5%;
prior to the Great Recession starter homes represented as much as 61% of total new-home
sales. Homes priced below $150,000 were 1.3% of sales, down from 1.9% a year
earlier.
* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.
As mentioned in our post about housing permits, starts and completions in April, single-unit completions barely budged by +1,000 units (+0.1%). Because sales fell (54,000 units; -5.9%), inventory for sale rose in absolute (+12,000 units) and months-of-inventory (+0.4 month) terms.
Existing home sales retreated further in April (160,000 units or -2.7%), to a SAAR of 5.85 million units (6.085 million expected). Inventory of existing homes for sale expanded in absolute (90,000 units) and months-of-inventory (0.3 month) terms. Because resales fell on a smaller proportional basis than new-home sales, the share of total sales comprised of new homes slipped to 12.9%. The median price of previously owned homes sold in April advanced to $341.600 ($15,300 or +4.7% MoM).
Housing
affordability gained 2.3 percentage points even though the median price of
existing homes for sale in March rose by $19,400 (+6.20% MoM; +18.4 YoY), to $334,500.
Concurrently, Standard
& Poor’s reported that the U.S. National Index in the S&P Case-Shiller
CoreLogic Home Price indices rose at a not-seasonally adjusted monthly change
of +2.0% (+13.2% YoY).
“More
than 30 years of S&P CoreLogic Case-Shiller data put these results into
historical context. The National Composite’s 13.2% gain was last exceeded more
than 15 years ago in December 2005, and lies very comfortably in the top decile
of historical performance,” said Craig
Lazzara, Managing Director and Global Head of Index Investment Strategy at
S&P DJI. “The unusual strength is reflected across all 20 cities; March’s
price gains in every city are above that city’s median level, and rank in the
top quartile of all reports in 19 cities.”
“These data are consistent with the hypothesis that Covid has encouraged potential buyers to move from urban apartments to suburban homes,” Lazzara added. “This demand may represent buyers who accelerated purchases that would have happened anyway over the next several years. Alternatively, there may have been a secular change in preferences, leading to a permanent shift in the demand curve for housing.”
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
Builders
started construction of privately-owned housing units in
April at a seasonally adjusted annual rate (SAAR) of 1,569,000 units (1.705
million expected).
This is 9.5% (±10.8%)* below the revised March estimate of 1,733,000
(originally 1.739 million units), but 67.3% (±21.6%) above the April 2020 SAAR
of 938,000 units; the not-seasonally adjusted YoY change (shown in the table
above) was -66.0%.
Single-family
housing starts in April were at a rate of 1,087,000; this is 13.4% (±7.9%)
below the revised March figure of 1,255,000 units (+58.2% YoY). Multi-family: 482,000
units (+0.8% MoM; +88.5% YoY).
* 90% confidence interval (CI) is not statistically different from zero. The Census Bureau does not publish CIs for the entire multi-unit category.
Total
completions were at a SAAR of 1,449,000 units.
This is 4.4% (±8.6percent)* below the revised March estimate of
1,515,000 (originally 1.580 million units), but 21.7% (±15.8%) above the April
2020 SAAR of 1,191,000 units; the NSA comparison: +22.0% YoY.
Single-family completions were at a SAAR of 1,045,000 units; this is 0.1% (±8.4%)* above the revised March rate of 1,044,000 units (+20.6% YoY). Multi-family: 404,000 units (-14.2% MoM; +25.7% YoY).
Total
permits amounted to a SAAR of 1,760,000 units (1.780 million expected). This is
0.3% (±1.2%)* above the revised March rate of 1,755,000 (originally 1.766
million units) and 60.9% (±1.8%) above the April 2020 SAAR of 1,094,000 units;
the NSA comparison: +63.2% YoY.
Single-family permits were at a SAAR of 1,149,000; this is 3.8% (±1.0%) below the revised March figure of 1,194,000 units (+69.2% YoY). Multi-family: 611,000 units (+8.9% MoM; +52.2% YoY).
Builder
confidence held stable in May despite growing concerns over the price and
availability of most building materials, including lumber. The May NAHB/Wells
Fargo Housing Market Index (HMI) showed that builder confidence in the market
for newly built single-family homes was 83, unchanged from April.
“Builder
confidence in the market remains strong due to a lack of resale inventory, low
mortgage interest rates, and a growing demographic of prospective home buyers,”
said NAHB Chairman Chuck
Fowke. “However, first-time and first-generation home buyers are
particularly at risk for losing a purchase due to cost hikes associated with
increasingly scarce material availability. Policymakers must take note and find
ways to increase production of domestic building materials, including lumber
and steel, and suspend tariffs on imports of construction materials.”
“Low
interest rates are supporting housing affordability in a market where the cost
of most materials is rising,” said NAHB Chief Economist Robert Dietz. “In
recent months, aggregate residential construction material costs were up 12%
year over year, and our surveys suggest those costs are rising further. Some
builders are slowing sales to manage their own supply chains, which means
growing affordability challenges for a market in critical need of more
inventory.”
With
labor and lot availability a challenge in many markets, Dietz cautioned that
“home buyers should expect rising prices throughout 2021 as the cost of
materials, land and labor continue to rise.”
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
Softwood lumber exports rose (13 MMBF or +14.1%) in March, and imports jumped (313 MMBF or +27.4%). Exports were 1 MMBF (+1.4%) above year-earlier levels; imports were 90 MMBF (+6.6%) higher. As a result, the year-over-year (YoY) net export deficit was 89 MMBF (+7.0%) larger. Also, the average net export deficit for the 12 months ending March 2021 was 8.4% larger than the average of the same months a year earlier (the “YoY MA(12) % Chng” series shown in the graph above).
North America (57.4%; of which Canada: 35.4%; Mexico: 22.0%), Asia (15.6%; especially China: 4.0%; and Japan: 3.4%), and the Caribbean: 19.6% (especially the Dominican Republic: 4.7%) were the primary destinations for U.S. softwood lumber exports. Year-to-date (YTD) exports to China were -43.3% relative to the same months in 2020. Meanwhile, Canada was the source of most (85.5%) of softwood lumber imports into the United States. Imports from Canada were 10.9% higher YTD than the same months in 2020. Overall, YTD exports were down 9.3% compared to 2020; imports: +12.4%.
U.S. softwood lumber export activity through the West Coast customs region represented 39.0% of the U.S. total; Gulf: 23.4%, and Eastern: 24.3%. Seattle (23.1% of the U.S. total) was the single most-active district, followed by Mobile (14.1%) and San Diego (12.7%). At the same time, Great Lakes customs region handled 57.9% of softwood lumber imports -- most notably the Duluth, MN district (23.3%) -- coming into the United States.
Southern
yellow pine comprised 18.2% of all softwood lumber exports; Douglas-fir (15.2%)
and treated lumber (13.8%) were also significant. Southern pine exports were down
32.5% YTD relative to 2020, while Doug-fir: +1.3%; and treated: -10.7%.
The foregoing comments represent the
general economic views and analysis of
Total
industrial
production (IP) increased 0.7% in April (+1.2% expected).
The indexes for mining and utilities increased 0.7% and 2.6%, respectively; the
index for manufacturing rose 0.4% despite a drop in motor vehicle assemblies
that principally resulted from shortages of semiconductors. An important
contributor to the gain in factory output was the return to operation of plants
that were damaged by February's severe weather in the south central region of
the country and had remained offline in March. The weather-induced drop in
total IP in February and the subsequent rebound in March are now estimated to
have been larger than reported last month.
At 106.3% of its 2012 average in April, total industrial production has moved up 16.5% from its level in April 2020 (the trough of the pandemic), but it was 2.7% below its pre-pandemic (February 2020) level.
Industry Groups
Manufacturing
output rose 0.4% in April (NAICS
manufacturing: +0.4% MoM; +23.3% YoY), with decreases of 0.4% and 1.1% for
durable and other manufacturing (publishing and logging), respectively,
outweighed by an increase of 1.3% for nondurable manufacturing. The index for
motor vehicles and parts fell 4.3%; excluding the motor vehicle sector, factory
output advanced 0.7%, primarily reflecting a further recovery in chemicals as
additional factories that had sustained weather-related damage during February
reopened. Elsewhere, industry results were mixed, with supply chain
difficulties possibly hindering production (wood products: +0.2%). Among nondurables, most major industry
categories recorded gains, but paper
products (-0.1%), printing and
support, and plastics and rubber products recorded modest losses.
The output of utilities moved up 2.6% in April after dropping substantially in March, when unseasonably warm weather reduced demand for heating. Mining production increased 0.7% in April; the index fell more than 9% in February because of the winter storm and recovered much of that loss in March.
Capacity
utilization (CU) for the industrial sector rose 0.5 percentage point (PP) in
April to 74.9%, a rate that is 4.7PP below its long-run (1972–2020) average.
Manufacturing CU increased 0.3PP in April to 74.1% (NAICS manufacturing: +0.4% MoM, to 74.7%; wood products: +0.2%; paper products: -0.1%). The operating rates for mining and utilities rose 0.7PP and 1.7 PP, respectively. The rates for all three sectors remained below their long-run averages.
Capacity
at the all-industries level was unchanged MoM (-0.1 % YoY) at 142.0% of 2012
output. Manufacturing (NAICS basis) was also unchanged (-0.1% YoY) at 140.1%. Wood products: +0.1% (+0.4% YoY) to 170.2%;
paper products: +0.1% (-0.3% YoY) at
109.1%.
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
