Economic Data and Growth

Building permits fell 10.8% in March and 7.4% over the year. Permits for single-family homes in March decreased 3.8% and 7.9% over the year. At the same time, permits for buildings with five or more units plummeted 23.5% from February and 5.3% over the year.

In March, housing starts jumped 10.8% from February and the same percentage over the year. Starts for single-family homes climbed 9.7% from February and 8.9% over the year. Meanwhile, starts for buildings with five or more units surged 9.6% over the month and 13.5% over the year.

Housing completions ticked up 0.1% over the month but fell 12.8% over the year. Single-family home completions declined 4.8% from February and 14.5% from March 2025. At the same time, completions for buildings with five or more units increased 10.2% over the month but decreased 9.1% from one year ago.

In February, the S&P Cotality Case-Shiller U.S. National Home Price NSA Index recorded a 0.7% annual gain, down from the 0.8% rise in January. The 10-City Composite increased 1.5%, down from 1.7% the previous month, while the 20-City Composite rose 0.9% year-over-year, down from 1.2% in January. Among the 20 cities, Chicago posted the highest annual gain at 5.0%, followed by New York at 4.7% and Cleveland at 4.2%. Meanwhile, Denver posted the lowest annual return, with prices falling 2.2%.

On a month-over-month basis, the U.S. National Index moved up 0.3% before seasonal adjustment. At the same time, the 10-City and 20-City Composites both stepped up, rising 0.6% and 0.4%, respectively. After seasonal adjustment, the U.S. National Index and 10-City Composite both increased 0.1%, while the 20-City Composite edged down less than 0.1%. The Northeast and Midwest continue to outperform other regions, but price declines across more than half of the major U.S. metropolitan markets signal a housing slowdown beyond just the Sun Belt. Meanwhile, in addition to Denver, Tampa (down 2.1%), Seattle (down 2.0%), Phoenix (down 1.8%), Dallas (down 1.7%), Los Angeles (down 0.8%) and Washington, D.C. (down 0.1%) exhibited declines in February.

Affordability concerns continue to be impacted by elevated interest rates, which show no signs of easing. Those concerns have held back transaction growth and kept increases in U.S. home values below inflation for nine consecutive months. Before seasonal adjustment, 6 of the 20 major metro areas saw price declines in February.

Consumer confidence inched up 0.6 points in April to 92.8. Among its components, the Present Situation Index contracted while the Expectations Index improved as customers’ concerns regarding the present situation worsened and concerns about the future eased.

The Present Situation Index, reflecting current business and labor market conditions, edged down 0.3 points to 123.8. Meanwhile, the Expectations Index, which reflects customers’ short-term outlook for income, business and labor market conditions, increased 1.2 points to 72.2, remaining below the recession signal threshold of 80 since February 2025.

Views of the current labor market situation improved in April, with 27.3% of consumers saying jobs were “plentiful,” down slightly from March (27.4%), while 19.8% said jobs were “hard to get,” also down from March (21.3%). Looking to the future, 16.1% expect more jobs to be available, up from 15.4% the prior month, while 26.9% anticipate fewer jobs, down from 27.8% the previous month.

Consumers’ views of the economy skewed pessimistic in April. In addition, mentions of inflation, oil and gas and war picked up as consumers continue to express concern over the conflict in the Middle East. Consumers’ 12-month inflation expectations edged down but remain elevated after a spike in March, and the proportion of consumers expecting higher interest rates rose to nearly 50.0%. At the same time, the share of consumers who believe that a recession is “very likely” over the next year increased, and the small share thinking the economy is already in a recession ticked up.

Buying plans for cars, with a clear preference for used cars, rose in April, and purchasing plans for homes recovered slightly. Meanwhile, consumers’ plans for buying other big-ticket items declined. At the same time, consumers’ intentions to purchase more services fell for all categories but pet care. Despite declining, restaurants, bars and take-out remained the top planned service spending category in April. Overall, consumers’ views of their current financial situation weakened slightly in April, while views of their future financial situation improved.

In April, Texas factory activity expanded at a faster pace after weakening the prior month. The production index increased from 6.8 to 19.0, climbing well above the series average of 9.6. The new orders index stepped up 3.8 points to 9.9, while the capacity utilization index jumped 12.6 points to 19.8, both above the series averages of 4.7 and 7.5, respectively. Meanwhile, the shipments index soared 13.2 points to 15.0, also climbing above the series average of 7.8. The Eleventh District consists of all of Texas, northern Louisiana and southern New Mexico.

Perceptions of manufacturing business conditions weakened in April, with the general business activity index moving down 2.1 points to -2.3. At the same time, the company outlook index turned positive, improving 6.5 points to 3.0. Moreover, the uncertainty index fell 8.1 points to 17.9 but remained slightly above the series average of 16.9.

Labor market indicators suggested a slight decline in headcounts and a longer workweek in April, with the employment index ticking up 0.1 points to -0.9 and the hours worked index rising 3.1 points to 4.0. Nearly 14.1% reported net hiring, while a larger percentage (15.0%) noted net layoffs.

Price pressures strengthened, while wage pressures weakened in April. The prices paid for raw materials index rose 4.3 points to 37.0. Meanwhile, the prices received for finished goods index jumped 9.2 points to 27.6, both higher than the series averages. The wages and benefits index ticked down 0.4 points to 24.8, also remaining above the series average of 21.0.

The outlook for future manufacturing activity remained positive in April, despite the future production index moving down 1.1 points to 34.6. Moreover, the future company outlook index declined 2.6 points to 15.6, while future general business activity increased 3.5 points to 14.1, as the future general business activity index climbed above the series average.

Manufacturing activity in the Fifth District rose in April after staying the same in March, with the composite manufacturing index increasing from 0 to 3. At the same time, the local business conditions index advanced from -5 to 10 in April. Despite an improvement in the headline index in April, manufacturers are less optimistic about the future, with the outlook for future local business conditions falling from 16 in March to 3 in April. The Fifth District consists of Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia.

Among its components, shipments remained unchanged and negative at -2 in April, while new orders rose from 4 to 8. The indexes for employment and vendor lead times ticked up in April, moving from -2 to 0 and from 13 to 14, respectively. Meanwhile, the share of firms reporting backlogs stayed the same, increasing from -10 to 0. At the same time, the average growth rate of prices paid accelerated in April, while the average growth rate for prices received slowed from March.

Looking ahead, firms expressed an expectation that both price indexes would increase in the next 12 months, and at a faster pace than forecasted in March. Expectations for future shipments and new orders remained positive but weakened from 26 to 21 and from 30 to 26, respectively. Expectations for backlogs ticked down from 3 to 0. Meanwhile, firms’ expectations about equipment and software spending fell from -2 to -5. In sum, businesses in the Fifth District are less optimistic about future business conditions and remain pessimistic about future investment plans.

The S&P Global Manufacturing PMI was 54.5 in April, up from the March reading of 52.3. New orders grew at the fastest pace in four years in April, but exports declined for the 11th consecutive month as tariffs and the conflict in the Middle East drove up costs and hindered foreign demand. Meanwhile, input and selling prices increased at faster paces as input and output cost inflation both hit 10-month highs. The conflict in the Middle East had a notable impact on new orders in April, with companies purchasing now to avoid price increases and supply shortages before they become more widespread.

Production rose during the month, and despite an uptick in sales, stocks of finished goods grew for the first time in three months. Employment declined for the first time in nine months as higher raw material costs have started influencing hiring decisions. Meanwhile, delivery times continued to lengthen, a result of the conflict in the Middle East causing widespread material shortages.

Expectations that the impact of the conflict in the Middle East will be less than previously forecasted drove business confidence to its highest level since February 2025. Furthermore, firms have a positive outlook for production, partly attributable to the large gains in new orders in April.

In April, the U.S. manufacturing sector expanded for the fourth consecutive month and at the same pace as the prior month, with the ISM Manufacturing® PMI remaining at 52.7% from March. Certain demand indicators, such as the New Orders and Backlog of Orders indexes, stayed in expansion territory, while the New Export Orders Index remained in contraction territory. Meanwhile, the Customers’ Inventories Index continued to contract into “too low” territory and at a faster pace, falling 1.0 percentage point to 39.1. Meanwhile, the Production Index expanded at a slower pace in April, dropping from 55.1% to 53.4%.

The New Orders Index expanded for a fourth consecutive month in April and at a slightly faster pace, ticking up 0.6 percentage points from March to 54.1%. Of the six largest manufacturing sectors, four—machinery, transportation equipment, chemical products and computer and electronic products—reported an increase in new orders. Optimism about near-term demand turned positive, with 1.6 positive comments for every negative comment.

The New Export Orders Index contracted for a second consecutive month in April, dropping 2.0 percentage points to 47.9%. Respondents remained concerned about trade and war frictions, with 1.6 negative comments for every positive comment. Meanwhile, the Imports Index expanded for the third consecutive month but at a slower pace in April, down 2.3 percentage points from March to 50.3%.

The Employment Index contracted for the 31st consecutive month and at a faster pace than the prior month, declining 2.3 percentage points from March to 46.4%. Of the six largest manufacturing sectors, three—transportation equipment, computer and electronic parts and machinery—reported increased employment. For every comment on hiring, 1.7 respondents noted reduced headcounts.

After surging 7.8 percentage points in March, the Prices Index jumped another 6.3 percentage points in April to 84.6%, indicating raw materials prices grew for the 19th straight month and at a much faster pace than the prior month. The index hit its highest reading since April 2022. Of the six largest manufacturing sectors, all reported increased prices. The increase continued to be driven by higher steel and aluminum prices impacting the entire supply chain and the tariffs applied to most imported goods, as well as increases in petroleum-based products as a result of the Middle East conflict. Roughly 70.3% of companies reported paying higher prices, up from 59.4% in March and from 21.0% in January 2025.

Real GDP increased at an annual rate of 2.0% in the first quarter of 2026, up from a 0.5% rise in the fourth quarter but slightly below consensus expectations. The increase in GDP during the first quarter mostly reflected increases in investment, consumer spending on services, exports and government spending, which were partially offset by reductions in consumer spending on goods and an increase in imports. Since, by definition, GDP measures domestic output, imports are subtracted from the final calculation since they are reflected in other parts of the equation, such as inventories and consumption.

Consumer spending grew at an annual rate of 1.6%, down from a 1.9% increase in the fourth quarter, with spending on services (up 2.4%) driving the gain, while spending on goods declined (down 0.1%). Consumer spending on nondurable goods edged down 0.2%, but spending on durable goods stayed the same after ticking up 0.1% in the fourth quarter. The decline in nondurable goods consumer spending was driven by food and beverages and clothing and footwear, with increases in other nondurable goods categories. Meanwhile, for consumer spending on durable goods, increases in motor vehicles and parts, furnishings and other durable goods were offset by drops in spending on recreational goods and vehicles. Within services, spending increases were relatively widespread, with health care being the largest contributor to the gain.

Investment grew 8.7% at an annual rate in the first quarter, after rising 2.3% in the fourth quarter. The improvement was driven by 13.0% and 43.4% surges in intellectual property products and information processing equipment investments, respectively, up from 5.4% and 4.3% in the fourth quarter. Meanwhile, business spending on structures declined 6.7%. Exports jumped 12.9% in the first quarter, with the rise primarily concentrated in goods exports (up 18.1%). At the same time, imports soared 21.4% in the first quarter, with the increase also primarily concentrated in goods (up 25.8%). The jump in federal government spending (up 9.3%) was driven by the rebound from the extended government shutdown in the fourth quarter, with nondefense spending up 20.3%. Meanwhile, state and local government spending increased 1.6% in the first quarter, up slightly from the 1.5% rise in the prior quarter.

Manufacturing activity grew at a slightly slower pace in the Tenth District in April, with the month-over-month composite index edging down to 10 in April from 11 in March. On the other hand, expectations for future activity improved 2 points to 18. The month-over-month activity loss was due to a decline in durable manufacturing, while nondurable manufacturing activity increased further. At the same time, all indexes except new orders for exports were positive in April. The Tenth Federal Reserve District encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico.

The production and shipments indexes both declined but remained positive, decreasing from 11 to 10 and from 20 to 15, respectively. Meanwhile, new orders fell from 15 to 12. The employment index moved down 5 points to 2. At the same time, the pace of growth for prices paid and prices received strengthened, with raw materials prices jumping 26 points to 63 and prices received rising 6 points to 25. Furthermore, the indexes for prices received and paid both increased over the year, moving up to 57 and 88, respectively.

In April, survey respondents were asked special questions about changes in energy costs and the ability to pass through energy-related costs. Overall, 93% of firms reported that they have experienced higher transportation costs in the last two months, 43% saw higher natural gas costs and 38% noted higher electricity costs. Furthermore, over two-thirds of firms that have experienced higher energy costs said they will pass on 0% to 20% of those costs to customers, 3% will pass on 21% to 40%, 8% will pass through 41% to 60%, 4% will pass on 61% to 80% and 8% will pass on 81% to 100%. Meanwhile, 6% of firms have had to decrease prices.

The S&P Global Flash U.S. Manufacturing PMI increased from 52.3 to 54.0 in April, a 47-month high. This continues the trend of nine consecutive months of growth. Factory production and new order growth improved in April, with both experiencing their strongest expansion since 2022. Meanwhile, export orders declined after stagnating the prior month as a result of uncertainty caused by the conflict in the Middle East.

Inventories grew marginally in April as companies continued to purchase safety stock amid delivery concerns. At the same time, supplier delivery time lengthened to the greatest extent since August 2022, with respondents attributing the increase to the conflict in the Middle East. Manufacturers’ input cost inflation rose to a ten-month high and at the second fastest rate since July 2022. Meanwhile, selling price inflation also moved up, resulting in the largest jump in average selling prices since July 2022. Overall, price increases accelerated for manufacturers and the service industry.

Overall business activity rose to a three-month high, stepping up from 50.3 in March to 52.0 in April. While manufacturing growth accelerated, the services sector rose only slightly, moving to a two-month high. Overall, growth of new orders accelerated, driven by domestic demand as export orders fell at an increased rate. Employment grew marginally as manufacturing headcounts fell for the first time in nine months.

Furthermore, optimism about future business conditions improved in April, with manufacturers’ optimism rising to the highest level in over a year. The optimism reflected manufacturers’ upturn in orders, additional investment in marketing and hopes of reshoring. In addition, the outlook for service providers remained low as war-related concerns further exacerbated cost-of-living concerns.