In December, the monthly average value of the U.S. dollar (USD) depreciated against all three currencies we track: Canada’s “loonie” (-2.1%), the euro (-0.8%), and the Japanese yen (-3.8%). On the broad trade-weighted index basis (goods and services) the USD weakened by 1.1% against a basket of 26 currencies.
The foregoing comments represent the
general economic views and analysis of
Construction spending during November 2023 was estimated at a seasonally
adjusted annual rate (SAAR) of $2,050.1 billion, 0.4% (±1.0%)* above the
revised October estimate of $2,042.5 billion (originally $2,027.1 billion); expectations
were for +0.6%. The November figure is 11.3% (±1.5%) above the November 2022 SAAR
of $1,842.2 billion; the not-seasonally adjusted YoY comparison (shown in the
table below) is +11.6%.
During
the first 11 months of this year, construction spending amounted to
$1,817.1 billion, 6.2% (±1.0%) above the $1,711.1 billion for the same period
in 2022.
* 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 $1,595.0 billion, 0.7% (±0.5%) above
the revised October estimate of $1,584.4 billion (originally $1,579.3 billion):
- Residential. $896.8 billion, +1.1% (±1.3%)* of which
- Home improvement. $338.5 billion, -0.8% (-2.8% YoY);
- Nonresidential. $698.2 billion, +0.2% (±0.5%)*.
Public Construction
Public
construction spending was $455.1 billion, 0.7% (±1.8%)* below the revised
October estimate of $458.1 billion (originally $447.8 billion):
- Educational. $99.2 billion, -0.3% (±2.0%)*;
- Highway. $135.8 billion, +0.1% (±4.4%)*.
Click
here for a
discussion of November’s new residential permits, starts and completions, and here for a
discussion of new and existing home sales, inventories and prices.
The foregoing comments represent the
general economic views and analysis of
Sales of new
single-family houses in November 2023 were at a seasonally adjusted annual rate
(SAAR) of 590,000 units (690,000 expected).
This is 12.2% (±15.6%)* below the revised October rate of 672,000 (originally
679,000 units), but 1.4% (±19.8%)* above the November 2022 SAAR of 582,000
units; the not-seasonally adjusted (NSA) year-over-year comparison (shown in
the table above) was 0.0%. For longer-term perspectives, NSA sales were 57.5%
below the “housing bubble” peak and 21.6% below the long-term, pre-2000 average.
The
median sales price of new houses sold in November was $434,700 (+4.8% MoM, or
$19,800). The average sales price was $488,900 (-1.9%, or $9,600). Homes priced
at/above $750,000 comprised 7.3% of sales, down from the year-earlier 14.6%.
* 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 November, single-unit completions slid
by 32,000 units (-3.2%). Sales fell by a greater amount (82,000 units, or -12.2%),
resulting in inventory for sale expanding in both absolute (+11,000 units) and months-of-inventory
terms (+1.3 months).
Existing home sales advanced (30,000 units or +0.8%) in November to a SAAR of 3.82 million units (3.775 million expected). The inventory of existing homes for sale contracted in both absolute (-20,000 units) and months-of-inventory (-0.1 month) terms. Because new sales retreated while resales rose, the share of total sales comprised of new homes decreased to 13.4%. The median price of previously owned homes sold in November dipped to $387,600 (-1.0% or $4,000).
Housing affordability fell 3.1 percentage points as the median price of
existing homes for sale in October retreated by $1,300 (-0.3% MoM; +3.0% YoY) to
$396,100. Concurrently, Standard & Poor’s reported that the U.S. National Index in the S&P Case-Shiller
CoreLogic Home Price indices decelerated to a not-seasonally adjusted monthly change
of +0.2% (but +4.9% YoY).
"U.S.
home prices accelerated at their fastest annual rate of the year in October,”
said Brian
Luke, Head of Commodities, Real & Digital assets at S&P DJI. “Our
National Composite rose by 0.2% in October, marking nine consecutive monthly
gains and the strongest national growth rate since 2022.
“Detroit
kept pace as the fastest growing market for the second month in a row,
registering an 8.1% annual gain. San Diego maintained the second spot with 7.2%
annual gains, following by New York with a 7.1% gain. We are experiencing broad-based
home price appreciation across the country, with steady gains seen in 19 of 20
cities. This month’s report reflects trendline growth compared to historical
returns and little disparity among cities and regions.
“Each
of our 10-city, 20-city and National Index, remain at all-time highs, with 8 of
20 cities registering all-time highs (Miami, Atlanta, Chicago, Boston, Detroit,
Charlotte, New York and Cleveland). While Portland remains slightly down
compared to last year’s gains, Phoenix and Las Vegas have flipped to year-over-year
gains. The Midwest and the Northeast region are fastest growing markets, while
the Southwest and West regions have lagged other regions for over a year. A
solid, if unspectacular report, this month’s index reflects a rising tide
across nearly all markets.
“Home prices leaned into the highest mortgage rates recorded in this market cycle and continued to push higher. With mortgage rates easing and the Federal Reserve guiding toward a slightly more accommodative stance, homeowners may be poised to see more appreciation.”
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.
In
its third estimate of 3Q2023 gross domestic product (GDP), the Bureau of Economic Analysis (BEA) returned the headline growth rate of the U.S.
economy to on par with the initial estimate -- i.e., a seasonally adjusted and annualized
rate (SAAR) of +4.86% (+5.2% expected), down
0.29 percentage point (PP) from the second estimate (“3Qv2”) but +2.06PP from 2Q2023.
As
can be seen in the right-hand graph above, the underlying components have shifted
around quite noticeably over time. In 3Qv1 and 3Qv2, three groupings of GDP
components -- personal consumption expenditures (PCE), private domestic
investment (PDI), and government consumption expenditures (GCE) -- had
contributed positively to the headline while net exports (NetX) detracted from
it. In 3Qv3, by contrast, all four components contributed positively to the
headline -- although the contribution from NetX was marginal at best.
This report “primarily reflected a downward revision to consumer spending,” the BEA wrote. “Imports, which are a subtraction in the calculation of GDP, were revised down,” resulting in NetX moving ever so slightly into positive territory.
As
for details (billions of chained 2017 dollars; all relative to 3Qv2) --
PCE (-$18.1B):
PDI (-4.4B):
NetX (+$4.7B):
GCE (+$2.5B):
The BEA’s change in real final sales of domestic product -- which ignores inventories -- was revised to +3.60% (-0.16PP from 3Qv2), a level 1.54PP above the 2Q2023 estimate. QoQ growth in gross domestic income, by contrast, was unchanged at a less “zippy” +1.5%, up from +0.5% in 1&2Q2023.
“Nothing here was sufficient to change the
economy’s overall trajectory nor the expectation that growth slowed in the
fourth quarter,” said chief economist Joshua
Shapiro of MFR Inc.
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
November at a seasonally adjusted annual rate (SAAR) of 1,560,000 units (1.360
million expected).
This is 14.8% (±14.0%) above the revised October estimate of 1,359,000
(originally 1.372 million units) and 9.3% (±14.6%)* above the November 2022 SAAR
of 1,427,000 units; the not-seasonally adjusted YoY change (shown in the table
above) was +8.5%.
Single-family
housing starts in November were at a SAAR of 1,143,000; this is 18.0% (±12.9%)
above the revised October figure of 969,000 units (+43.7% YoY). Multi-family: 417,000
units (+6.9% MoM; -32.8% 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 1,447,000. This is 5.0% (±15.1%)* above the
revised October estimate of 1,378,000 (originally 1.410 million units) but 6.2%
(±15.2%)* below the November 2022 SAAR of 1,543,000 units; the NSA comparison: -6.1%
YoY.
Single-family housing completions were at a SAAR of 960,000; this is 3.2% (±13.2%)* below the revised October rate of 992,000 units (-14.0% YoY). Multi-family: 487,000 units (+26.2% MoM; +15.4% YoY).
Total
permits were at a SAAR of 1,460,000 units (1.470 million expected). This is 2.5%
below the revised October rate of 1,498,000 (originally 1.463 million units)
but 4.1% above the November 2022 SAAR of 1,402,000 units; the NSA comparison: +2.3%
YoY.
Single-family authorizations were at a SAAR of 976,000; this is 0.7% above the revised October figure of 969,000 units (+23.2% YoY). Multi-family: 484,000 units (-8.5% MoM; -21.8% YoY).
Press
release from NAHB’s Robert Dietz:
“Falling
mortgage rates helped end a four-month decline in builder confidence, and
recent economic data signal improving housing conditions heading into 2024.
“Builder
confidence in the market for newly built single-family homes rose three points
to 37 in December, according to the National Association of Home Builders
(NAHB)/Wells Fargo Housing Market Index (HMI). With mortgage rates down roughly
50 basis points over the past month, builders are reporting an uptick in
traffic. The housing market appears to have passed peak mortgage rates for this
cycle, and this should help to spur home buyer demand in the coming months,
with the HMI component measuring future sales expectations up six points in
December.
“It
is worth noting that single-family builder sentiment has separated somewhat
from recent starts/permits data. Our statistical analysis indicates that
temporary and outsized differences between builder sentiment and starts occur
after short-term interest rates rise dramatically, increasing the cost of land
development and builder loans used by private builders. In turn, higher
financing costs for home builders and land developers add another headwind for
housing supply in a market low on resale inventory. While the Federal Reserve
is fighting inflation, state and local policymakers could also help by reducing
the regulatory burdens on the cost of land development and home building,
thereby allowing more attainable housing supply to the market. Looking forward,
as rates moderate, this temporary difference between sentiment and construction
activity will decline.
“But
with mortgage rates still running above 7% throughout November, per Freddie Mac
data, many builders continue to reduce home prices to boost sales. In December,
36% of builders reported cutting home prices, tying the previous month’s high
point for 2023. The average price reduction in December remained at 6%,
unchanged from the previous month. Meanwhile, 60% of builders provided sales
incentives of all forms in December, the same as November but down slightly
from 62% in October.”
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.
Total industrial production (IP) increased 0.2% in November (+0.3% expected), and manufacturing output rose 0.3%. The increase in manufacturing output was more than accounted for by a 7.1% bounceback in motor vehicles and parts production following the resolution of strikes at several major automakers. The index for manufacturing excluding motor vehicles and parts decreased 0.2%. The output of utilities moved down 0.4%, and the output of mines moved up 0.3%. Total industrial production in November was 0.4% below its year-earlier level.
Market Groups
The output of major market groups was mixed in November, with the rebound in motor vehicles contributing to most areas of strength. A 7.5% increase in the index for automotive products contributed to a gain of 3.5% in consumer durables, while the production of consumer nondurable goods decreased 0.8%. The output of business equipment moved up 0.9% primarily because of an increase in the index for transit equipment. Defense and space equipment registered a gain of 1.2%. The indexes for construction supplies and for business supplies were unchanged relative to October. An increase of 0.3% in materials output was buoyed by a large increase in the index for consumer parts (2.7%) as motor vehicle parts production also rebounded in November.
Industry Groups
Within
durable manufacturing, the output of motor vehicles and parts rebounded 7.1%
after a strike-induced drop of 9.9% in October. Elsewhere in durable
manufacturing, increases of around 1.0% were seen in the indexes for computer
and electronic products as well as for aerospace and miscellaneous
transportation equipment. Decreases of around 1.0% occurred in the indexes for wood
products and for miscellaneous. Within nondurable manufacturing, the only
increase was seen in the index for printing and support (0.2%). The remaining
categories receded (e.g., paper: -1.1%), with the largest declines
observed in the indexes for textile and product mills (1.9%) and for apparel
and leather (3.4%).
Mining output moved up 0.3% in November and was 2.3% above its year-earlier level. The index for utilities stepped down 0.4% in November and was 1.0% below its year-earlier level.
Capacity
utilization (CU) moved up 0.1 percentage point (PP) to 78.8% in November, a
rate that is 0.9PP below its long-run (1972–2022) average.
Manufacturing CU edged up 0.2PP to 77.2% in November, a rate that is 1.0PP below its long-run (1972–2022) average; wood products: -1.1%; paper: -1.0%. The operating rate for mining rose 0.3PP to 93.7%, a rate that is 7.3PP above its long-run average. The operating rate for utilities moved down 0.5PP to 70.8%, well below its long-run average.
Capacity
at the all-industries level increased by 0.1% MoM (+1.5% YoY) to 130.3% of 2017
output. Manufacturing also edged up by 0.1% (+1.4% YoY) to 129.2%. Wood products: less than +0.1% (+0.5%
YoY) at 120.1%; paper products: -0.1%
(-1.1% YoY) to 105.4%.
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.
The
Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1% in November
on a seasonally adjusted basis (0.0% expected),
after being unchanged in October. Over the last 12 months, the all-items index
increased 3.1% before seasonal adjustment.
The
index for shelter continued to rise in November, offsetting a decline in the
gasoline index. The energy index fell 2.3% over the month as a 6.0-percent
decline in the gasoline index more than offset increases in other energy
component indexes. The food index increased 0.2% in November, after rising 0.3%
in October. The index for food at home increased 0.1% over the month and the
index for food away from home rose 0.4%.
The
index for all items less food and energy rose 0.3% in November, after rising
0.2% in October. Indexes which increased in November include rent, owners'
equivalent rent, medical care, and motor vehicle insurance. The indexes for
apparel, household furnishings and operations, communication, and recreation
were among those that decreased over the month.
The
all-items index rose 3.1% for the 12 months ending November, a smaller increase
than the 3.2-percent increase for the 12 months ending October. The index for all
items less food and energy rose 4.0% over the last 12 months, as it did for the
12 months ending October. The energy index decreased 5.4% for the 12 months
ending November, while the food index increased 2.9% over the last year.
The
Producer Price Index for final demand (PPI-FD) was unchanged in November,
seasonally adjusted (+0.1% expected). Final-demand
prices decreased 0.4% in October and rose 0.4% in September. On an unadjusted
basis, the index for final demand increased 0.9% for the 12 months ended in
November.
In
November, the indexes for both final-demand goods and for final-demand services
were unchanged.
The
index for final demand less foods, energy, and trade services edged up 0.1% in
November, the sixth consecutive advance. For the 12 months ended in November,
prices for final demand less foods, energy, and trade services rose 2.5%.
Final Demand
Final-demand
goods: The index for final-demand goods was unchanged in November after
dropping 1.4% in October. In November, price increases of 0.6% for final-demand
foods and 0.2% for final-demand goods less foods and energy offset a
1.2-percent decrease in the index for final-demand energy.
Product
detail: Within final-demand goods in November, prices for chicken eggs jumped
58.8%. The indexes for fresh fruits and melons, utility natural gas, electric
power, and carbon steel scrap also moved higher. In contrast, prices for
gasoline fell 4.1%. The indexes for processed poultry, industrial chemicals,
jet fuel, and liquefied petroleum gas also moved lower.
Final-demand
services: The index for final-demand services remained unchanged in November,
the same as in October. In November, prices for final-demand services less
trade, transportation, and warehousing edged up 0.1%. Conversely, the indexes
for final-demand trade services and for final-demand transportation and
warehousing services declined, 0.2% and 0.5%, respectively. (Trade indexes
measure changes in margins received by wholesalers and retailers.)
Product detail: Within the index for final-demand services in November, prices for traveler accommodation services rose 4.0%. The indexes for deposit services (partial); health, beauty, and optical goods retailing; food and alcohol wholesaling; and apparel, footwear, and accessories retailing also advanced. In contrast, margins for automobile retailing (partial) declined 5.1%. The indexes for chemicals and allied products wholesaling, portfolio management, furniture retailing, and truck transportation of freight also fell.
The not-seasonally adjusted price indexes we track were mostly lower on a MoM basis and all lower YoY.
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purposes of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
