Sunday, October 22, 2017

September’s industrial production, new housing construction, and existing home sales

regular reports released this past week included Industrial production and Capacity Utilization for September from the Fed, the September report on New Residential Construction from the Census Bureau, the Existing Home Sales Report for September from the National Association of Realtors (NAR), and the Regional and State Employment and Unemployment report for September from the Bureau of Labor Statistics...this week also saw the release of the first two regional Fed manufacturing surveys for October: the Empire State Manufacturing Survey for October from the New York Fed, which covers New York and northern New Jersey, reported their headline general business conditions index rose from +24.4 in September to a three year high of +30.2 in October, suggesting that First District manufacturing was growing at a robust pace, while the Philadelphia Fed Manufacturing Survey for October, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions rose from +23.8 in September to +27.9 in October, also suggesting ongoing strong growth in that region's manufacturing...

Industrial Production Up 0.3% in September, after major revisions to August and July

the Fed's G17 release on Industrial production and Capacity Utilization indicated that industrial production increased by 0.3% in September after falling by 0.7% in August...the percentage change from July to August was revised from down 0.9% to down 0.7%, while the percentage change from June to July was revised from up 0.4% to down 0.1%....the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose from 104.3 in August to 104.6 in September; at the same time, the index for August was revised from the previously reported 104.7 to 104.3, while the July index was revised from 105.7 to 105.1, the June reading for the index was revised from 105.3 to 105.2, and the May index was revised from 105.1 to 105.0....for the 3rd quarter as compared to the 2nd quarter, industrial production fell at a 1.5% annual rate, its first quarterly decrease since the second quarter of 2016....however, total industrial production was still 1.6% higher than in September a year earlier....

the manufacturing index, which accounts for more than 77% of the total IP index, increased by 0.1, from 102.9 in August to 103.0 in September, after August's manufacturing index was revised down from 103.3...July's manufacturing index was also revised lower, from 103.6 to 103.2...meanwhile, the mining index, which includes oil and gas well drilling, rose from 109.7 in August to 110.1 in September, after the August index was revised down from 110.3....however, the mining index is still 9.8% higher than it was a year ago....finally, the utility index, which often fluctuates due to above or below normal temperatures, rose 1.5% in September, from 98.9 to 100.4, after the previously reported 5.5% August decrease was revised to one of 4.9%, while the previously reported 1.5% July increase was revised lower, to an increase of 0.5%...

this report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization for total industry rose to 76.0% in September from 75.8% in August, which had previously been reported at 76.1% ...capacity utilization of NAICS durable goods production facilities rose from 74.2% in August to 74.9% in September, after August's figure was revised down from 74.5%, while capacity utilization for non-durables producers fell from a downwardly revised 77.0% to 76.3%...capacity utilization for the mining sector rose to 83.5% in September, up from 83.4% in August, which was originally reported as 83.9%, while utilities were operating at 74.8% of capacity during September, up from their 73.7% of capacity during August, which was revised up from 73.9%...for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories.... 

Housing Starts, Building Permits Reported Down in September

the September report on New Residential Construction (pdf) from the Census Bureau reported that their widely watched estimate of new housing units that were started during the month was at a seasonally adjusted annual rate of 1,127,000, which was 4.7 percent (±8.1 percent)* below the revised August estimated annual rate of 1,183,000 housing unit starts, but was 6.1 percent (±8.8 percent)* above last September's pace of 1,132,000 housing starts a year...the asterisks indicate that the Census does not have sufficient data to determine whether housing starts actually rose or fell over the past month, or even over the past year, with the figure in parenthesis the most likely range of the change indicated; in other words, September's housing starts could have been up by 3.4% or down by as much as 12.8% from those of August, with even larger revisions possible after a number of months...in this report, the annual rate for August housing starts was revised from the 1,180,000 reported last month to 1,183,000, while July starts, which were first reported at a 1,155,000 annual rate, were revised up from last month's initial revised figure of 1,190,000 annually to 1,185,000 annually with this report....

those annual rates of starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 101,300 housing units were started in September, down from the 103,800 units started in August...of those housing units started in September, an estimated 72,300 were single family homes and 27,900 were units in structures with more than 5 units, down from the revised 77,900 single family starts in August, but up from the 25,200 units started in structures with more than 5 units in August...

the monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data...in September, Census estimated new building permits were being issued at a seasonally adjusted annual rate of 1,215,000 housing units, which was 4.5 percent (±1.6 percent) below the revised August rate of 1,272,000 permits, and was 4.3 percent (±1.7 percent) below the rate of building permit issuance in September a year earlier...the annual rate for housing permits issued in August was revised from 1,300,000 down to 1,272,000  annually....again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for 100,500 housing units were issued in September, down from the revised estimate of 119,600 new permits issued in August...the September permits included 66,300 permits for single family homes, down from 76,600 single family permits in August, and 31,000 permits for housing units in apartment buildings with 5 or more units, down from 39,600 such multifamily permits a month earlier...

for more graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts decreased to 1.127 Million Annual Rate in September and Comments on September Housing Starts... 

September Existing Home Sales Inch Up from August

the National Association of Realtors (NAR) reported that their seasonally adjusted count of existing home sales rose by 0.7% from August to September, the first increase in four months, projecting that 5.39 million homes would sell over an entire year if the September home sales pace were extrapolated over that year, a pace that was still 1.5% below the annual sales rate projected in September of a year ago; August sales at a 5.35 million annual rate were unrevised from last month's report...the NAR also reported that the median sales price for all existing-home types was $245,100 in September, down from $253,100 in August but 4.4% higher than in September a year earlier, which they say "marks the 67th straight month of year-over-year gains"...the NAR press release, which is titled "Existing-Home Sales Inch 0.7 Percent Higher in September", is in easy to read plain English, so if you're interested in the details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily find them in that press release...as sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered during the selling process…

since this report is entirely seasonally adjusted and at a not very informative annual rate, we like to look at the raw data overview (pdf), which gives us a close approximation to the actual number of homes that sold each month...this unadjusted data indicates that roughly 465,000 homes sold in September, down by 13.1% from the 535,000 homes that sold in August, and down by 4.3% from the 486,000 homes that sold in September of last year, so we can see that it was just the seasonal adjustment that caused the annualized published figures to show an increase...that same pdf indicates that the median home selling price for all housing types fell 2.4%, from a revised $253,100 in August to $245,100 in September, while the average home sales price was $286,700, down 3.1% from the $294,400 average sales price in August, but up 3.5% from the $277,000 average home sales price of September a year ago, with the regional average home sales prices ranging from a low of $225,900 in the Midwest to a high of $386,200 in the West... for both seasonally adjusted and unadjusted graphs and additional commentary on this report, see the following two posts from Bill McBride at Calculated Risk: NAR: "Existing-Home Sales Inch 0.7 Percent Higher in September" and A Few Comments on September Existing Home Sales...

 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most from the aforementioned GGO posts, contact me…)

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