Economic Data and Growth

Existing home sales dipped 2.5% in August and fell 4.2% from August 2023. Housing inventory rose to 1.35 million units, reflecting a 0.7% increase from July and a 22.7% boost from last year. The median existing home price was $416,700, up 3.1% from last year, with all four U.S. regions reporting price increases.

Single-family home sales decreased 2.8% from July, with the median price increasing 2.9% from August 2023 to $422,100. Condo and co-op sales held steady month-over-month but declined 11.6% from the previous year, with the median price up 3.5% from the prior year to $354,200.

Homes were typically on the market for 26 days in August, up from July’s 24 days and 20 days in August 2023. First-time buyers made up 26% of sales, matching the all-time low from November 2021 and down from 29% in both July and a year ago. All-cash sales accounted for 26% of transactions in August, while investor purchases represented 19%. Distressed sales remained steady at 1%.

In the Northeast, existing home sales dropped 2.0% from July, with a median price of $503,200, up 7.7% from last year. The Midwest saw no change in sales month-over-month, but the median price rose to $315,400, a 3.8% increase from August 2023. In the South, sales fell 3.9% from July, with a median price of $367,000, reflecting a 1.6% year-over-year rise. The West reported a 2.7% sales decline from July and a 1.4% decrease from the previous year, with a median price of $622,500, up 2.2% from a year ago. The housing market remained sluggish with sales dipping across the country.

Building permits rose 4.9% in August but are 6.5% lower than August 2023. Permits for single-family homes were 2.8% higher than July but were down 0.5% in the past year. Permits for buildings with five or more units surged 8.4% from July but are down a significant 16.8% in the past year.

In August, housing starts increased 9.6% over the month and 3.9% over the year. Starts for single-family homes were up 15.8% from July and 5.2% from August 2023. On the other hand, starts for buildings with five or more units declined 6.7% from July and were down 6.2% from August 2023.

Housing completions in August were up 9.2% from July and a significant 30.2% higher than August 2023. Single-family home completions were down 5.6% from July to 1,029,000 but up 8.4% over the year. Completions for buildings with five or more units rose 36.5% and were 79.2% higher than August 2023.

In September, Philadelphia’s regional manufacturing activity was mixed. The index for current general business activity turned positive, rising from -7.0 to 1.7. Nearly 22% of firms reported increased activity this month, while 20% reported decreases and nearly 51% reported no change. On the other hand, the indexes for new orders and shipments declined and turned negative. Firms reported an increase in employment after declining last month, with the employment index rising back into positive territory at 10.7. Firms also provided forecasts on production levels, with a higher share of firms reporting an increase in production (nearly 38%) than those reporting a decrease (28%).

Price indexes moved higher, with firms continuing to report overall increases in prices. The prices paid index rose to its highest reading since December 2022, reflecting the notable portion of firms experiencing higher input costs. The prices received index also rose, undoing the previous month’s decrease.

Looking ahead, most future indicators increased. The index for future general business activity rose slightly to 15.8, indicating growing optimism among firms. A higher proportion of firms still expected increases in activity. Additionally, the new orders, shipments and future employment indexes also rose. Although the future prices paid index increased, the future prices received rose by a larger margin. Meanwhile, the future capital expenditures index moved up to its highest reading since March 2022.

Manufacturing activity in New York state grew in September for the first time in nearly a year, with the headline general business conditions index rising 16 points to 11.5. The new orders index climbed 17 points to 9.4, a multiyear high, while the shipments index rose 18 points to 17.9, its highest level in a year and a half. Unfilled orders increased slightly, while inventories rose 11 points to zero, indicating inventories are now level after two months of declines. Delivery times were little changed, and supply availability was the same reading (-2.1) as August.

Employment continued to shrink modestly, with the index for the number of employees coming in at -5.7. The average employee workweek recovered some after a steep drop the prior month, signaling a slight increase in hours worked. Input and selling prices were little changed, as reflected in the prices paid index at 23.2 and the prices received index at 7.4. Manufacturers continued to face rising costs while operating in a weakened pricing environment.

Firms were more optimistic about the future. The future business activity index rose eight points to 30.6, with nearly 45% of respondents expecting conditions to improve over the next six months. However, the capital spending index fell 11 points, dipping below zero for the first time since 2020.

The number of U.S. job openings in manufacturing decreased in March, according to new data from the U.S. Bureau of Labor Statistics.

• Meanwhile, the number of job openings in the larger economy remained about the same, at approximately 8.5 million.

What’s going on: There were 570,000 open positions in the U.S. manufacturing industry in March, down from an adjusted 587,000 in February.

• Open positions in durable goods manufacturing also declined, to 353,000 in March from an adjusted 379,000 in February.
• Openings in nondurable goods, however, inched up to 217,000 from an adjusted 208,000.

Hires and quits: Hiring in the sector remained about the same as the last reading, coming in at 323,000 in March (down marginally from February’s 324,000).

• Total separations—which include quits, layoffs, discharges and other severance of employment—decreased slightly in March (to 330,000) from February (an adjusted 338,000).

Inflation, as measured by the Federal Reserve’s preferred gauge, remained elevated last month (CNN).

What’s going on: “The Personal Consumption Expenditures price index … accelerated to 2.7% for the year ended in March. … That rate was above economists’ expectations for a 2.6% gain and landed above February’s reading of 2.5%.”

• Prices increased 0.3% on a monthly basis, the same pace as in February.

Core PCE: So-called “core” PCE, which excludes often-volatile food and energy prices, remained steady at 2.8%.

Spending: Consumer spending stayed strong in March, rising 0.8% from February and exceeding economists’ expectations.

Two major U.S. West Coast ports saw continued cargo growth in March, coinciding with supply chain fallout from the Francis Scott Key Bridge collapse in Baltimore (Los Angeles Daily News).

What’s going on: The Port of Los Angeles “processed 743,000 twenty-foot equivalent units (TEUs, the industry’s standard measurement for cargo units) last month—up 19% from March 2023. It was the port’s eighth-consecutive month of year-over-year growth.”

• The Port of Long Beach last month moved 654,082 TEUs, a cargo increase of 8.3% from March 2023. Its imports rose 8.4% compared to last year.
• The ports anticipate April—traditionally “slack season” for the entry points—being “another busy month,” Port of Los Angeles Executive Director Gene Seroka said.

Why it’s important: The growth is reflective of “resilient consumer spending, [which] is key to our nation’s growth,” Seroka continued. “U.S. economic indicators remain positive even with some uncertainty regarding interest rates and the latest inflation data.”

Shoring up systems: The Port of Los Angeles is working to ensure the safety of its systems following the March 26 Key Bridge collapse and an executive order by President Biden that increases cybersecurity regulations at all U.S. ports.

New orders for durable goods in the U.S. increased more than expected last month (Business Insider and U.S. Census Bureau). Shipments were virtually unchanged.

What’s going on: Orders for manufactured durable goods rose 2.6% in March, to $283.4 billion.

• The rise followed a downwardly revised 0.7% increase in February.
• Shipments of durable goods slipped slightly, down $0.1 billion, but remained essentially flat at $282.4 billion following a 1.2% increase in February.

The details: Excluding transportation, new orders increased 0.2%, and excluding defense, new orders rose 2.3%.

• Transportation equipment drove the slight decrease in shipments of durable goods.

Inventories and unfilled orders: Stocks of manufactured durable goods were nearly unchanged at $527.9 billion, a decrease of less than $0.1 billion from February. This follows seven consecutive monthly increases.

• Unfilled orders for manufactured durable goods rose 0.4% in March to $1,397.2 billion, following a decrease in February.

Manufacturing output slowed in April, according to index provider S&P Global.

What’s going on: While overall business activity continued to grow this month—albeit at a slower pace—manufacturing growth eased.

• S&P Global’s Flash US Manufacturing PMI came in at 49.9, a four-month low and down from March’s 51.9.
• Any number below 50 indicates contraction.

Why it’s happening: The decline in orders can be linked “to inflationary pressures, weak demand and sufficient stock holdings at customers.”

However … Employment in manufacturing in April rose modestly.

What it means: “[T]he drivers of inflation have changed,” said S&P Global Market Intelligence Chief Business Economist Chris Williamson. “Manufacturing has now registered the steeper rate of price increases in three of the past four months, with
factory cost pressures intensifying in April amid higher raw material and fuel prices.”