Economy

Key Economic Indicators Released in April

May 1, 2014

Economic data released in April indicated signs of slower growth in the economy. Survey participants, however, continue to be optimistic about business activity during the next three to six months.

The Architecture Billings Index fell to 48.8 in April, indicating contraction after hovering just above the neutral point for the last two months. The protracted softening in demand may be due partly to weather conditions but is being watched for more serious concerns.

Housing permits authorizations dropped 2.4 percent from February but were up 11.2 percent y/y to a SAAR of 990,000. Housing starts in March were at a SAAR of 946,000, 2.8 percent above February’s estimate, but 4.9 percent below March 2013. Privately owned housing completions fell 0.2 percent in February; single family housing completions were at a rate of 602,000, 3.8 percent below February.

Sales of new residential homes also continued to soften reaching the lowest level in eight months. Sales in March dropped 14.6 percent from February and 13.3 percent year over year. Harsh weather as well as increasing mortgage rates, rising home prices and low availability of new construction affected sales. Median home price rose to $290,000 with the average price at $334,200. Inventory of 193,000 units represented a supply of six months at the current sales rate.

Sales of existing homes were essentially flat according to the National Association of Realtors. March sales dipped 0.2 percent from February to a SAAR of 4.59 million units. Sales were down 7.5 percent from March 2013. Existing home prices rose 7.9 percent. Inventory increased 4.7 percent to 1.99 million homes for sale at the end of March.

The Chicago Business Barometer was at its lowest level since August, down 3.9 points to 55.9. New orders dropped for the second month in a row. Production increases helped steady the barometer as other components weakened. Employment dropped sharply, erasing February double-digit gains.

Steel buyers in the ISM Steel Buyers survey were optimistic about the next three months to six months, expecting orders to rise. Selling prices were viewed as competitive but orders were still considered too low for most efficient levels of operation. Off shore sources are looking attractive for future buying with foreign prices lower than domestic prices.

The main index of the Empire State Manufacturing Survey index fell four points in April. Business activity was generally flat for the month with only slight changes in new orders and shipments. Input costs increased in April along with selling prices. The six month outlook looks promising with a rise in new orders expected. New Yorkers anticipate prices paid and received to decline somewhat in the coming months. Capital expenditures and technology spending is expected to increase.

The JP Morgan Global Manufacturing PMI registered a five month low in March at 52.4 but has been in the expansion range for 16 months. JP Morgan says the pace of manufacturing growth is slowing from the highs reached in 2013 but manufacturing will continue to expand in 2014.

The US auto industry sold 1.53 million vehicles in March, beating projected sales. Winter weather kept consumers away early in the month but sales picked up in the latter half to finish strong.