Economy

Key Economic Data

March 3, 2014

The Empire State Manufacturing Index for general business conditions fell 8 points to 4.5 in the February 2014 Empire State Manufacturing Survey after rising 10 points in January. New orders were flat for the month, declining 11 points to -0.2. Manufacturers remained optimistic about business conditions for the next six months. The future general business conditions index rose to 39.0 along with a six point increase for future new orders. The future prices paid index fell to 40.0 and future prices received held steady at 23.8.

The January PMA Business Conditions Report showed metalforming companies were expecting weaker business conditions during the next three months. At a meeting of PMA’s Cleveland District, William E. Gaskin, PMA president, said participants were frustrated by government inaction. “Most agreed that increasing regulatory costs and frustrations over the lack of action in Washington, D.C. on tax rates, immigration and trade agreements threatened to restrict a stronger economic recovery.”

The ISM Manufacturing Index registered 51.3 percent in January. Although the index slid 5.2 percentage points from December, it is still an indicator of growth in the manufacturing sector. Most of the indices that make up the PMI fell in January. The new orders index took a significant dive of 13.2 percent to register at 51.2 percent, indicating an eighth month of growth but at a much slower rate. Production, that has been in the growth range for 17 months, also slowed, dropping 6.9 percent to a reading of 54.8. Prices are increasing faster as reflected by a 7 percent increase to 60.5 percent in January.

The JPMorgan Global Manufacturing PMI registered 52.9 in January, almost unchanged from December’s high of 53.0 and signaling the fourteenth straight month of expansion. Production and new orders continued upward which helped increase employment levels. New export business slowed in January. Sharp discrepancies in growth were seen between developed and emerging markets. The UK, Japan and Germany were at the top of the PMI rankings while China, Brazil, Russia, India and Indonesia were near the bottom.

The AIA Architecture Billings Index rose modestly in January to 50.4 from 48.5 in December. The regional averages were: South (53.5), West (51.1), Midwest (46.5), and Northeast (43.6). By sector indices were as follows: multi-family residential (51.8), commercial/industrial (50.9), mixed practice (48.4), institutional (46.5). The project inquiries index was 58.5.

New Residential Construction housing starts in January were down 16 percent from December and 20.1 percent from November with very little difference between single and multi-family construction. On a three month moving average basis the recent results form only a slight blip on the long term growth curve. Apartment rental now seems preferable to home ownership in the minds of a significant proportion of the public. This is continuing to drive down the ratio of single to multi-family units, which now stands at the lowest level in 30 years.

New Home Sales for single family homes rose 9.6 percent to a seasonally adjusted annual rate of 468,000 in January from a revised December rate of 427,000. The year-over-year increase was a 2.2 percent above the January 2013 estimate of 458,000. Median sales price was $260,100 and the average sales price was $322,800. Inventory is still limited with the seasonally adjusted estimate of new houses for sale at the end of January at 184,000—a 4.7 month supply at the current sales rate. Sales rose in the South, West and Northeast but fell by 17.2 percent in the Midwest.

Existing home sales in January fell to the lowest level since July 2012.Home sales were at SAAR of 4.62 million in January from 4.87 million in December, and were 5.1 percent below the 4.87 million-unit pace in January 2013. Total housing inventory at the end of January rose 2.2 percent to 1.90 million existing homes available for sale, which represents a 4.9-month supply at the current sales pace, up from 4.6 months in December.

The S&P/Case-Shiller US National Home Price Index for December showed home prices edging down by 0.1 percent for the second consecutive month in the 20-City Composite Home Price Index. Home prices year-over-year, however, rose 11.3 percent. “Gains are slowing from month-to-month and the strongest part of the recovery in home values may be over,” said David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices.

US auto sales were mixed in January with automakers blaming winter weather on slipping sales. January is typically a soft month for the industry and will likely not affect forecasts for 16-16.5 million light vehicle sales for 2014. Ford and GM saw sales fall while Chrysler sales jumped 8 percent y/y. Toyota, Honda and Volkswagen all had decreased sales for the month. Nissan sales rose 11.8 percent.

Construction employment rose by 48,000 jobs in January according to analysis of data by the Associated General Contractors of America. Total construction employment for the month was 5,922,000.

Empire State Manufacturing Index. General business conditions fell 8 points in the February 2014 Empire State Manufacturing Survey after rising 10 points in January, but remained positive at 4.5. New orders were flat for the month, the shipment index dropped 13 points to 2.1, and the inventory index fell to -5.0 indicating a slight drop in inventory levels. The future general business conditions index rose to 39.0 along with a six point increase for future new orders.