Sunday, October 24, 2021

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

Widely watched reports that were 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, and the Existing Home Sales Report for September from the National Association of Realtors (NAR)....also released this week was the Regional and State Employment and Unemployment report for September from the Bureau of Labor Statistics, a report which breaks down the two employment surveys from the monthly national jobs report by state and region....while the text of this report provides a useful summary of the data, the serious statistics aggregation can be found in the tables linked at the end of the report, where one can find the civilian labor force data and the change in payrolls by industry for each of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands....in addition to those agency reports, this week also saw the release of another regional Fed manufacturing survey: the Philadelphia Fed Manufacturing Survey for October, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions fell from +30.7 in September to +23.8 in October, indicating that a smaller but still significant majority of the region's manufacturers are seeing improving conditions in October than a month ago..

Industrial Production Fell 1.3% in September after August Production was Revised Lower

The Fed's G17 release on Industrial production and Capacity Utilization indicated that industrial production decreased by 1.3% in September after falling by 0.1% in August, which was revised from the 0.4% increase previously reported...after those decreases, industrial production was still 4.6% higher than in September a year ago, but down from the 5.9% year over year increase reported a month ago.....the industrial production index, with the benchmark now set for average 2017 production to equal to 100.0, fell from a revised 101.3 in August to 101.0 September; after the index for August was revised from the previously reported 101.6 to 101.3, the index for July was revised from the previously reported 101.2 to 101.4, the index for June was revised from the previously reported 100.3 to 100.4, while the May index of 99.9 was unchanged from the previous report....for the 3rd quarter as compared to the 2nd quarter, industrial production rose at a 4.3% annual rate, it's fifth consecutive increase since the pandemic related production decrease in the second quarter of last year....

The manufacturing index decreased by 0.7% in September, from 99.4 in August to 98.7 in September, after August's manufacturing index was revised from 99.7 to 99.4, July's manufacturing index was revised from 99.5 to 99.8, June's manufacturing index was revised from 98.0 to 98.1, May's manufacturing index was revised from 98.3 to 98.4, and the April manufacturing index was revised from 97.5 to 97.8...the major factor in the September decrease was a 7.2% drop in production of motor vehicles and parts, due to ongoing shortages of semiconductors, but other factory output fell 0.3% as well....meanwhile, the mining index, which includes oil and gas well drilling, was hit by hurricane Ida induced shut ins of oil and gas production in the Gulf of Mexico, and fell from fell from 106.5 in August to 104.1 in September, after the August index was revised down from 107.3, but is still 6.9% higher than it was a year ago....finally, the utility index, which often fluctuates due to above or below normal temperatures, fell 3.6% to 102.1 in September, after the August index was revised from 105.5 to 105.8, but it is still 1.6% higher than in September of a year ago...

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 fell from 76.2% in August to 75.2% in September, after falling from a revised 76.3% in July....capacity utilization of NAICS durable goods production facilities fell from 75.8% in August to 75.4% in September, while capacity utilization for non-durables producers fell from 78.0% to 77.2%...capacity utilization for the mining sector fell to 73.9% in September from 75.5% in August, which was revised down from the 76.1% that was originally reported, while utilities were operating at 73.0% of capacity during September, down from their 75.8% of capacity during August, which was revised up from 75.6%...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 and Building Permits Reported Lower 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 1,555,000, which was 1.6 percent (±11.4 percent)* below the revised August estimated annual rate of 1,580,000 housing unit starts, but was 7.4 percent (±13.0 percent)* above last September's pace of 1,274,000 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 9.8%, or down by as much as 13.0% from those of August, with a 10% chance that the actual change could have even been outside of that wide range....in this report, the annual rate for August housing starts was revised from the 1,615,000 reported last month to 1,580,000, while July starts, which were first reported at a 1,534,000 annual rate, were revised up from last month's initial revised figure of 1,554,000 annually to a 1,562,000 annual rate 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 135,800 housing units were started in September, down from the 140,600 units started in August...of those housing units started in September, an estimated 92,800 were single family homes and 42,300 were units in structures with more than 5 units, down from the revised 97,000 single family starts in August, and down from the 42,900 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, which can also be impacted by the weather...in September, Census estimated new building permits were being issued at a seasonally adjusted annual rate of 1,589,000 housing units, which was 7.7 percent (±0.9 percent) below the revised August rate of 1,721,000 permits, but was virtually unchanged (±1.1 percent)* from the 1,589,000 rate of building permit issuance now reported for September a year earlier...the annual rate for housing permits issued in August was revised from an annual rate of 1,728,000 to 1,721,000 annually....

Again, these annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for 134,900 housing units were issued in September, down from the revised estimate of 154,600 new permits issued in August...the September permits included 87,400 permits for single family homes, down from 93,500 single family permits in August, and 43,900 permits for housing units in apartment buildings with 5 or more units, down from 57,200 such multifamily permits a month earlier...

For graphs and more commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts Decreased to 1.555 Million Annual Rate in September and Most Housing Units Under Construction Since 1974; that latter post points to a serious and often overlooked problem with US housing construction recently, in that the widely watched housing starts are not leading to housing completions, because of construction component shortages and other supply chain problems…

Existing Home Sales Rose 7.0% in September as Sales Prices Slide Again

The National Association of Realtors (NAR) reported that their seasonally adjusted tally of existing home sales rose by 7.0% from August to September, the fourth consecutive increase, projecting that 6.29 million homes would sell over an entire year if the September home sales pace were extrapolated over that year, a pace that was still 2.3% below the annual sales rate projected in September of a year ago...August sales, at a 5.88 million annual rate, were revised but remained at the same rate reported a month ago ...the NAR also reported that the median sales price for all existing-home types was $352,800 in September, 13.3% higher than in September a year earlier, which they say "marks 115 straight months of year-over-year increases"...the NAR press release, which is titled "Existing-Home Sales Ascend 7.0% 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, et al., 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 for 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 548,000 homes sold in September, down from the 576,000 homes that sold in August, and 2.7% fewer homes than the 563,000 homes that sold in September of last year, so we can see that the seasonal adjustment gave a considerable boost to the monthly change published in the Realtor's press release....that same pdf indicates that the median home selling price for all housing types fell fell for a third consecutive month, from a revised $357,700 in August to $352,800 in September, while the average home sales price was $372,600, down 1.1% from the $346,800 average sales price in August and also the third straight drop, but up 8.6% from the $343,100 average home sales price of September a year ago, with regional average home sales prices ranging from a low of $290,700 in the Midwest to a high of $499,100 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 Increased to 6.29 million in September and Median House Price Growth Decelerated for Fourth Consecutive Month...

 

(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 of which are picked from the aforementioned GGO posts, contact me…)  

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