Economic Data and Growth

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.

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.”

Sales of previously owned homes in the U.S. declined in March, CNN reports.

What’s going on: “Existing home sales, which make up the majority of the housing market, fell 4.3% in March to a seasonally adjusted annual rate of 4.19 million, the National Association of Realtors reported Thursday.”

• The median price for a previously owned home last month was $393,500, an increase of 4.8% from March 2023, which was the highest on record.
• The only region of the country to see an increase in existing home sales last month was the Northeast.

Why it’s happening: Higher list prices combined with still-elevated mortgage rates continue to make home purchasing difficult for Americans.

What it means: “Though rebounding from cyclical lows, home sales are stuck because interest rates have not made any major moves,” said NAR Chief Economist Lawrence Yun.

• However, “[t]here are nearly six million more jobs now compared to pre-Covid highs, which suggests more aspiring homebuyers exist in the market.”

U.S. industrial production increased modestly in March, in keeping with economist forecasts, according to baha.

What’s going on: “Industrial production in the United States rose by 0.4% in March after increasing 0.1% in the previous month, the Federal Reserve’s Board of Governors stated in its report published on Tuesday.”

The details: Manufacturing output increased 0.5% on a monthly basis and 0.8% on an annual basis. It rose 1.2% in February.

• Mining declined 1.4% in March and 2.0% year on year.
• The utilities index grew 2.0% for the month but declined 3.1% year on year.

Capacity utilization: Capacity utilization—a measure of potential output—for the industrial sector as a whole increased to 78.4%, up from 78.2% in February but “1.2 percentage points below its long-run average.”

What it means: These data are among “signs that manufacturing is starting to pick up,” MarketWatch (subscription) reports.

• “The S&P Global U.S. Manufacturing PMI has been in expansion territory for the past three months, and the ISM factory index was 50.3 in March, the first reading above the break-even level of 50 since September 2022.”

Prices paid by businesses to goods and services producers in the U.S. rose by slightly less than anticipated in March, according to Investing.com.

What’s going on: “The producer price index for final demand rose 0.2% last month, after rising by 0.6% in February, the Labor Department’s Bureau of Labor Statistics said. Economists had expected the PPI to gain 0.3%. In the 12 months through January, the PPI increased 2.1%, below the 2.2% expected, after climbing 1.6% in February.”

• “Core” PPI, which excludes food and energy prices, rose 0.2% on the month, for an annual increase of 2.4%.
• The data comes just a day after the release of a higher-than-anticipated consumer price index for last month.

The details: Services inflation stayed elevated, with a gain of 0.3% in prices in March, Barron’s reports.

• Goods prices, however, edged down 0.1%.
• A 1.6% decline in energy prices made up much of March’s overall decrease and outweighed a 0.8% increase in food prices.

Why it’s important: The news may mean an interest-rate cut from the Federal Reserve will come later than previously thought.