< Back to All Articles

March Housing Starts, April Manufacturing Surveys and Weekly Jobless Claims

While builders are still slow in getting more shovels in the ground, the signs point to a lot more activity in the next few months.


Key Data: Starts: +2%; 1-Family: +4.4%; Permits: -5.7%; 1-Family: +2.1%/ Phila. Fed: +2.5 points; Employees: +8 points/ MAPI: -2 points/ Jobless Claims: up 12,000

In a Nutshell: "While builders are still slow in getting more shovels in the ground, the signs point to a lot more activity in the next few months."

What it Means: While builders are becoming more positive about conditions, they are not doing that much about it. Housing starts rose in March, but the rise did not unwind the large February decline. First-quarter activity was nearly 9% below the fourth quarter 2014 average. That is hardly a surprise given the winter weather. The data were all over the place. Better weather led to a more than doubling of construction in the Northeast and a 31% surge in the Midwest. In contrast, starts fell by nearly 20% in the West and by over 3% in the South. No pattern there. What caused only a limited rise in construction activity was a major downturn in multi-family activity, especially in the West. That is likely the result of normal volatility in the data, implying we really shouldn't be too worried that starts didn't rebound more in March. Indeed, there is every reason to believe that the April report will be quite strong. First, single-family construction is not faltering. Second, and more fundamentally, there were roughly 300,000 more permits taken out during the first quarter than there were starts – and almost all of them were for multi-family dwellings. As I always note, builders are not paying for permits for the fun of it. Those permits are going to be used in the spring.

The manufacturing sector took a big hit this winter as both weather and a strong dollar slowed the sector down. The latest data don't indicate any major improvement. The Philadelphia Fed's manufacturing survey rose modestly in early April. Firms are hiring a lot more people, but how long that will last is uncertain as new orders are growing more slowly. Expectations rose, but minimally. A second survey, one done quarterly by the Manufacturers Alliance for Productivity and Innovation (MAPI), indicated that activity also eased modestly in the first quarter. Despite a rise in current orders, capacity utilization and investment, most other indicators declined. My takeaway is that conditions moderated but didn't fall greatly.

Jobless claims rose a touch, but they remain at levels consistent with solid to strong job gains.

Markets and Fed Policy Implications: The headline housing numbers didn't tell the full story. While construction failed to rebound sharply in March, I would be shocked if the April numbers were not robust. Sharp declines in multi-family starts often are followed by large increases, and the gap between permits and starts in that segment points to that happening. The strong dollar is taking a toll on manufacturing, and that is likely to be an issue for a while. But the sector is holding on, even if it is not leading the way. All in all, the first quarter was a disappointment, but there is reason to expect conditions to improve as we go forward. But we need data to show that is happening before the Fed does anything.


You may also like:

2016 FOMC Meeting

By Joel Naroff, President and Chief Economist, Naroff Economic Advisors.

November Commentary: 2016 Regional Economic Outlook

The region's economy should build on the solid 2015 growth and accelerate over the next year.

August Employment Report

"We've hit full employment, so is anyone surprised that firms are having trouble finding qualified workers to hire?"




Beneficial Bank Footer Logo




1818 Beneficial Bank Place
1818 Market Street
Philadelphia, PA 19103

888.742.5272
info@thebeneficial.com
The use of non-secure email is intended for general questions, inquiries and comments only. Confidential Customer information cannot be accepted electronically.


Routing No: 236075689
SWIFT Code: BENFUS33

scroll top

Please Note:

You have clicked on a link that will navigate you away from the Beneficial Bank website to an external site that may have different privacy standards. Please click ‘Continue’ to proceed or ‘Cancel’ to stay on the Beneficial Bank site.

Continue Cancel
×

Unsecure Email Disclosure

Your privacy is very important to us. We would like to advise you that Internet email is not a secure method of communication. Please do not submit any information that you consider confidential. We recommend you do not include any specific identifying information such as your social security, account, PIN numbers, date of birth, etc...

Continue Cancel
×

Please Note:

You have clicked on a link that will navigate you away from the Beneficial Bank website to an external site that may have different privacy standards. Please click ‘Continue’ to proceed or ‘Cancel’ to stay on the Beneficial Bank site.

Continue Cancel
×






USA PATRIOT Act

To help the government fight the funding of terrorism and money laundering activities, the USA PATRIOT Act requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

What this means for you – When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license and other identifying documents.