In April, the monthly average value of the U.S. dollar (USD) depreciated against all currencies we track: Canada’s “loonie” (-1.5%), euro (-2.3%), and Japanese yen (-0.1%). 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 March 2023 was estimated at a seasonally
adjusted annual rate (SAAR) of $1,834.7 billion, 0.3% (±0.5%)* above the
revised February estimate of $1,829.6 billion (originally $1,844.1 billion); expectations
were for +0.1%. The March figure is 3.8% (±1.2%) above the March 2022 SAAR of
$1,768.2 billion; the not-seasonally adjusted YoY comparison (shown in the
table below) is +3.0%.
During
the first three months of this year, construction spending amounted to $403.3
billion, 4.3% (±1.0%) above the $386.7 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 $1,435.1 billion, 0.3% (±0.5%)* above
the revised February estimate of $1,430.8 billion (originally $1,453.2
billion):
- Residential. $827.7 billion in March, -0.2% (±1.3%)* of which
- Home improvement. $338.1 billion, +0.3% (-4.2% YoY);
- Nonresidential. $607.4 billion, +1.0% (±0.5%).
Public Construction
Public
construction spending was $399.6 billion, 0.2% (±1.0%)* above the revised
February estimate of $398.8 billion (originally $391.8 billion):
- Educational. $86.9 billion, +0.7% (±1.8%)*;
- Highway. $121.7 billion, -0.1% (±2.6%)*.
Click
here for a
discussion of March’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
The
Bureau of Economic Analysis (BEA) pegged its advance (first) estimate of 1Q2023
U.S. gross domestic product (GDP) at a seasonally adjusted and annualized rate
(SAAR) of +1.06% (+2.0% expected), down
1.50 percentage points (PP) from 4Q2022’s +2.56%.
On
a year-over-year (YoY) basis, which should eliminate any residual seasonality
distortions present in quarter-over-quarter (QoQ) comparisons, GDP in 1Q2023 was
1.56% higher than in 1Q2022; that growth rate was slightly faster (+0.68PP) than
4Q2022’s +0.88% relative to 4Q2021.
Three of the four groupings of GDP components -- personal consumption expenditures (PCE), net exports (NetX), and government consumption expenditures (GCE) -- contributed positively to the 1Q headline. Private domestic investment (PDI) detracted from it.
As
for details (all comparisons to 4Q2022) --
PCE:
*
Goods. Spending on durable goods jumped (+$89.4 billion, chained 2012 dollars),
led by motor vehicles and parts (+$55.4B) and recreational goods and vehicles (+$14.8B).
Spending on non-durable goods edged up (+$7.1B), led by other nondurable goods (+$7.8B).
*
Services. Gains (+$50.4B) were led by health care (+$32.6B) and food services
and accommodations (+$11.0B).
PDI:
*
Fixed investment. This decline (-$3.7B) was led by a broad-based retreat in
equipment (-$24.0B), followed by residential investment (-$6.1B), but largely offset
by expenditures on nonresidential structures (+$12.2B) and intellectual
property products (+$12.0B).
*
Inventories. Nonfarm inventories shrank by $142.1B; farm: +$7.8B.
NetX:
*
Exports. Goods exports rose by $45.0B; services: -$10.3B.
*
Imports. Goods imports rose by $29.6B; services: -$0.3B. Recall that the net
change in imports is inversely related to the change in the GDP headline.
GCE: State and local consumption expenditures (+$13.5B) led this category,
followed by federal nondefense consumption expenditures (+$11.8B).
Annualized growth in the BEA’s real final sales of domestic product, which excludes the value of inventories, was +3.32% (up 2.23PP from 4Q).
Consumer
Metric Institute’s Rick Davis
summarized the key points of this report as follows:
--
This report is not nearly as bad as the headline number might indicate, having
suffered materially from inventory drawdowns.
--
Consumer spending on both goods and services improved to a respectable growth
rate.
--
Three quarters of the contraction in spending for commercial/private fixed
investment essentially stopped, and governmental spending remained robust.
--
Perhaps most significantly, household disposable income saw enough of an
increase that savings rates took a noticeable upturn.
“Except
for the modest headline number, this was not the ‘start of a downturn’ report
that many had expected,” Davis concluded, adding, “In fact, consumer spending
on goods showed surprising strength after suffering through four consecutive
quarters of contraction. That noted, we will eagerly await the next round of
BEA annual adjustments three months hence.”
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 March 2023 were at a seasonally adjusted annual rate
(SAAR) of 683,000 units (634,000 expected).
This is 9.6 percent (±15.2 percent)* above the revised February rate of 623,000
(originally 640,000 units), but 3.4 percent (±12.7 percent)* below the March
2022 SAAR of 707,000 units; the not-seasonally adjusted (NSA) year-over-year
comparison (shown in the table above) was -2.9%. For longer-term perspectives,
NSA sales were 50.8% below the “housing bubble” peak and 26.2% above the
long-term, pre-2000 average.
The
median sales price of new houses sold in March 2023 was $449,800 (+3.8%, or $16,600).
The average sales price was $562,400 (+12.1%, or $60,600). Homes priced
at/above $750,000 comprised 12.1% of sales, up from the year-earlier 11.8%.
* 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 March, single-unit completions climbed by 25,000 units (+2.4%). Sales also rose (60,000 units, or +9.6%), resulting in inventory for sale shrinking in both absolute (-2,000 units) and months-of-inventory (-0.4 month) terms.
Existing home sales resumed their decline when sliding (-2.4% or 110,000 units) in March to a SAAR of 4.44 million units (4.5 million expected). Inventory of existing homes for sale expanded in absolute terms (+10,000 units) but was unchanged in months-of-inventory terms. Because resales retreated while new-home sales advanced, the share of total sales comprised of new homes increased to 13.3%. The median price of previously owned homes sold in March rose to $375,700 (+3.3% or $12,100).
Housing affordability slipped (-0.3 index point) as the median price of
existing homes for sale in February rose by $2,100 (+0.6% MoM; -0.7 YoY) to $367,500.
Concurrently, Standard & Poor’s reported that the U.S. National Index in the S&P Case-Shiller
CoreLogic Home Price indices poked higher at a not-seasonally adjusted monthly change
of +0.2% (+2.0% YoY).
“Home
price trends moderated in February 2023,” said Craig
Lazzara, Managing Director at S&P DJI. “The National Composite, which
had declined for seven consecutive months, rose a modest 0.2% in February, and
now stands 4.9% below its June 2022 peak. Our 10- and 20-City Composites
performed similarly, with February gains of 0.3% and 0.2%; these Composites are
currently 6.0% and 6.6% below their respective peaks. On a trailing 12-month
basis, the National Composite is only 2.0% above its level in February 2022;
the 10- and 20-City Composites are both up 0.4% on a year-over-year basis.
“The
moderation we observed nationally is also apparent at a more granular level.
Before seasonal adjustment, prices rose in 12 cities in February (versus in
only one in January). Seasonally adjusted data showed nine cities with rising
prices in February (versus five in January). With or without seasonal
adjustment, most cities’ February results showed improvement relative to their
January counterparts.
“February’s
results were most interesting because of their stark regional differences.
Miami’s 10.8% year-over-year gain made it the best-performing city for the
seventh consecutive month. Tampa (+7.7%) and Atlanta (+6.6%) continued in
second and third place, with Charlotte (+6.0%) close behind. Results were
different in the Pacific and Mountain time zones. Last month, four West Coast
cities (San Francisco, Seattle, San Diego, and Portland) were in negative
year-over-year territory. In February they were joined by four of their western
neighbors, as Las Vegas (-2.6%), Phoenix (-2.1%), Los Angeles (-1.3%), and
Denver (-1.2%) all tipped into negative territory. It’s unsurprising that the
Southeast (+7.8%) remains the country’s strongest region, while the West
(-4.2%) continues as the weakest.
“The results released today pre-date the disruptions in the commercial banking industry which began in early March. Although forecasts are mixed, so far the Federal Reserve seems focused on its inflation-reduction targets, which suggests that interest rates may remain elevated, at least in the near-term. Mortgage financing and the prospect of economic weakness are therefore likely to remain a headwind for housing prices for at least the next several months.”
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 March
at a seasonally adjusted annual rate (SAAR) of 1,420,000 units (1.400 million expected).
This is 0.8% (±13.0%)* below the revised February estimate of 1,432,000
(originally 1.450 million units) and 17.2% (±9.1%) below the March 2022 SAAR of
1,716,000 units; the not-seasonally adjusted YoY change (shown in the table
above) was -17.0%.
Single-family
housing starts in March were at a SAAR of 861,000; this is 2.7% (±14.4%)* above
the revised February figure of 838,000 units (-26.8% YoY). Multi-family: 559,000
units (-5.9% MoM; +6.1% 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 1,542,000 units. This is 0.6% (±13.3%)* below the
revised February estimate of 1,552,000 (originally 1.557 million units), but 12.9%
(±18.6%)* above the March 2022 SAAR of 1,366,000 units; the NSA comparison: +13.3%
YoY.
Single-family completions were at a SAAR of 1,050,000; this is 2.4% (±12.4%)* above the revised February rate of 1,025,000 units (+0.5% YoY). Multi-family: 492,000 units (-6.6% MoM; +58.9% YoY).
Total
permits were at a SAAR of 1,413,000 units (1.441 million expected). This is 8.8%
below the revised February rate of 1,550,000 (originally 1.524 million units)
and 24.8% below the March 2022 SAAR of 1,879,000 units; the NSA comparison: -23.2%
YoY.
Single-family authorizations were at a SAAR of 818,000; this is 4.1% above the revised February figure of 786,000 units (-26.3% YoY). Multi-family: 595,000 units (-22.1% MoM; -17.9% YoY).
Press
release from NAHB’s Robert Dietz:
“Builders
remained cautiously optimistic in April as limited resale inventory helped to
increase demand in the new home market even as the industry continues to
grapple with building material issues.
“Builder
confidence in the market for newly built single-family homes in April rose one
point to 45, according to the National Association of Home Builders
(NAHB)/Wells Fargo Housing Market Index (HMI).
“Currently,
one-third of housing inventory is new construction, compared to historical
norms of a little more than 10%. More buyers looking at new homes, along with
the use of sales incentives, have supported new home sales since the start of
2023.
“While
AD&C loan conditions are tight, there is not significant evidence thus far
that pressure on the regional bank system has made this lending environment for
builders and land developers worse. Builders note that additional declines in
mortgage rates, to below 6%, will price-in further demand for housing.
Nonetheless, the industry continues to be plagued by building material issues,
including lack of access to electrical transformer equipment.
“The
HMI survey shows that the share of builders reducing home prices continues
trending down, as 30% said they reduced prices in April, compared to 31% in
March and February, 35% in December and 36% in November. The average price reduction
in April was 6%, the same as in February and March but lower than in December
(8%). The share of builders using incentives to bolster sales has edged up from
57% in February, to 58% in March to now 59% in April, but it’s still lower than
it was last December (62%).”
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) rose 0.4% in March (+0.3% expected) and was little changed in 1Q, increasing at an annual rate of 0.2%. In March, manufacturing and mining output each fell 0.5%. The index for utilities jumped 8.4%, as the return to more seasonal weather after a mild February boosted the demand for heating. At 103.0% of its 2017 average, total IP in March was 0.5% above its year-earlier level.
Market Groups
The major market groups posted mixed results in March. Nondurable consumer goods, business supplies, and energy materials all recorded notable gains as a result of the jump in the output of utilities. Defense and space equipment posted the only other gain, increasing 0.8%. Construction supplies recorded the largest drop (1.8%), followed by business equipment (1.0%), durable consumer goods (0.9%), and non-energy materials (0.5%).
Industry Groups
Manufacturing
output (SIC definition) decreased 0.5% in March and was 1.1% below its
year-earlier level (NAICS manufacturing: -0.5% MoM; -0.9% YoY). For 1Q, SIC
manufacturing edged up 0.3% at an annual rate (NAICS: +0.5%). The
indexes for durable manufacturing and nondurable manufacturing moved down 0.9%
and 0.1% in March, respectively, while the index for other manufacturing
(publishing and logging) fell 0.7%. Most durables industries posted losses; wood
products posted the largest drop (-2.9%), followed by nonmetallic
mineral products, which fell 2.6%. Within nondurables, gains of at least 1%
were registered by apparel and leather and by petroleum and coal products (paper
products: +0.8%); chemicals posted the largest loss, at 0.9%.
Mining output slipped 0.5% in March, with declines in the indexes for oil and gas extraction, other mining, and support activities. The output of utilities jumped 8.4%, with advances for both electric and natural gas utilities.
Capacity
utilization (CU) moved up to 79.8% in March, a rate that is 0.1 percentage
point (PP) above its long-run (1972–2022) average.
Manufacturing CU (SIC definition) moved down 0.5PP in March to 78.1%, a rate that is 0.1PP below its long-run average (NAICS manufacturing: -0.6% MoM, to 78.2%; wood products: -3.0%; paper: +0.9%). The operating rate for mining fell 0.5PP to 91.1%, while the operating rate for utilities jumped 5.6PP to 75.3%. The rate for mining was 4.7PP above its long-run average, while the rate for utilities remained substantially below its long-run average.
Capacity
at the all-industries level increased by 0.1% MoM (+1.4% YoY) to 129.1% of 2017
output. NAICS manufacturing also edged up by 0.1% (+1.2% YoY) to 128.0%. Wood products: +0.1% (+1.4% YoY) to 119.9%;
paper: -0.1% (-0.6% YoY) to 106.3%.
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.
With February exports of goods and services at $251.2 billion (-2.7% MoM; +8.1% YoY) and imports at $321.7 billion (-1.5% MoM; +0.7% YoY), the net trade deficit was $70.5 billion (+2.7% MoM; -19.2% YoY).
Softwood lumber exports fell (2 MMBF or -2.1%) in February, along with imports (144 MMBF or -11.6%). Exports were 10 MMBF (-9.4%) below year-earlier levels; imports: 115 MMBF (-9.5%) lower. As a result, the year-over-year (YoY) net export deficit was 105 MMBF (-9.5%) smaller. Also, the average net export deficit for the 12 months ending February 2023 was 0.6% below the average of the same months a year earlier (the “YoY MA(12) % Chng” series shown in the lumber-trade graph above).
North America (58.5% of total softwood lumber exports; of which Mexico: 34.7%; Canada: 23.9%), Asia (14.3%; especially China: 5.1%), and the Caribbean: 19.3% especially Jamaica: 7.6%) were the primary destinations for U.S. softwood lumber exports. Year-to-date (YTD) exports to China were 92.2% relative to the same month of the prior year. Meanwhile, Canada was the source of most (80.8%) softwood lumber imports into the United States. Imports from Canada were 7.0% lower YTD/YTD. Overall, YTD exports were down 4.5% compared to the prior year; imports: +2.1%.
U.S. softwood lumber export activity through the West Coast customs region represented 34.7% of the U.S. total; Gulf: 37.2%, and Eastern: 18.7%. Seattle (15.2% of the U.S. total), Mobile (18.6%), San Diego (16.2%) and Laredo (12.6%) were the most active districts. At the same time, the Great Lakes customs region handled 56.4% of softwood lumber imports -- most notably the Duluth, MN district (18.4%) -- coming into the United States. The Eastern region comprised 22.5% of imports, but that volume was distributed among the districts.
Southern
yellow pine comprised 21.1% of all softwood lumber exports; Douglas-fir (15.4%),
treated lumber (16.4%), other pine (8.8%) and finger-jointed (11.4%) were also
significant. Southern pine exports were up 26.0% YTD/YTD, while Doug-fir: -14.9%;
treated: -13.7%; other pine: (+0.9%); and finger-jointed: -0.7%.
The foregoing comments represent the
general economic views and analysis of
