{"id":1643,"date":"2020-01-17T10:41:16","date_gmt":"2020-01-17T15:41:16","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1643"},"modified":"2020-01-17T10:41:16","modified_gmt":"2020-01-17T15:41:16","slug":"december-housing-starts-and-permits-industrial-production-and-november-job-openings","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1643","title":{"rendered":"December Housing Starts and Permits, Industrial Production and November Job Openings"},"content":{"rendered":"\n

KEY DATA:<\/strong>  Starts: +16.9%; 1-Family: +11.2%; Permits:\n-3.9%; 1-Family: -0.5%\/ IP: -0.3%; Manufacturing: +0.2%\/ Openings: -561,000;\nHires: +39,000<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cThe surge in home construction was an\neye-opener, but outsized gains are usually aberrations so don\u2019t get too\nexcited.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  Wow, what a housing number.<\/em><\/strong>  At least that was the initial reaction to the\nhuge rise in housing starts.  Indeed, the\nlevel of activity reached a thirteen-year high. \nGains were not just in the volatile multi-family segment,<\/em><\/strong> which\nposted a nearly thirty percent rise, but they were in single-family as well<\/em><\/strong>.  The increases were spread across the entire\nnation<\/em><\/strong> and the only negative was a decline in single-family\nconstruction in the West.  On\nother hand, permit requests dropped. <\/em><\/strong> They were down in the Northeast and the South\nbut improved somewhat modestly in the Midwest and West.  When you see this type of outsized rise, the\ninitial reaction is to think that conditions may be changing.  But the reality is that huge, unexpected\nincreases are typically created by temporary factors.  December\u2019s weather was warmer than usual<\/em><\/strong>\nwith close to average precipitation. \nLast December, the opposite was the case as temperatures were well below\naverage and precipitation was above average. \nThere was likely a solid increase in construction, but much of the rise\nmay have been due to seasonal factors.<\/em><\/strong> \nWe will know better when the January numbers come out, which I expect to\nbe awful, so don\u2019t rush to judgment about the housing recovery just yet.<\/p>\n\n\n\n

While industrial production declined in December,\nlargely due to the warm weather cutting utility output, manufacturing activity increased.<\/em><\/strong>  Despite the end of the GM strike, which aided\nthe November numbers, the vehicle segment was still quite soft<\/em><\/strong>.  Assemblies were down sharply in December.  The good news was that computer, electronic\nand electrical equipment production is picking up steam.  Still, the outlook is uncertain.  Vehicle sales are slowly declining and Boeing\nis shutting it 737Max line and together, those negative as likely to lead to\nsome pretty bleak manufacturing numbers in the first part of this year.<\/em><\/strong><\/p>\n\n\n\n

Job openings continue to fade, even as hiring\nremains solid.  Compared to November\n2018, available positions were off by over eight hundred thousand.<\/em><\/strong>  The level was the lowest in nearly two\nyears.<\/em><\/strong>  That said, there\nare still an awful lot of unfilled jobs waiting to be filled.<\/em><\/strong>  As for hiring, it has become more volatile\nand the trend is flattening out.  MARKETS AND FED\nPOLICY IMPLICATIONS:<\/strong>The\ndata for the final month of the year are flowing in and they are about as mixed\nas you can get. Yesterday\u2019s December retail sales numbers were okay, but\nnothing special.  <\/em><\/strong>They indicated\nthat fourth quarter consumption is not likely to be significantly below what we\nsaw in the third quarter, which is good given that vehicle demand faded at the\nend of last year.  Today\u2019s data muddy the\nwaters a bit.  The shockingly large rise in home\nconstruction is likely to provide an unexpected boost to growth.<\/em><\/strong>As\nfor the manufacturing sector, production was off compared to the third quarter.  But offsetting that could be a narrowing in\nthe trade deficit.<\/em><\/strong>So,\nwhen you put things together, it looks like fourth quarter growth is coming in\naround 2%<\/em><\/strong>.  However, the\nfirst quarter of 2020 it might be a lot softer. \nDecelerating wage gains and Boeing\u2019s cut backs could restrain growth sharply.<\/em><\/strong>  While the phase one trade agreement might\nprovide some temporary help to the agricultural sector, it is not clear when\nthe additional sales will occur.  Which\nmeans that growth is likely to be at a pace that the Fed will be holding rates low\nfor quite a while.  As for investors,\nsub-2% growth should be a red flag, but I have yet to see much that sways the\nmarkets from its seemingly never-ending upward drive.<\/em><\/strong>Economic fundamentals should matter, but I\nwill believe that when I see it.<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  Starts: +16.9%; 1-Family: +11.2%; Permits: -3.9%; 1-Family: -0.5%\/ IP: -0.3%; Manufacturing: +0.2%\/ Openings: -561,000; Hires: +39,000 IN A NUTSHELL:  \u201cThe surge in home construction was an eye-opener, but outsized gains are usually aberrations so don\u2019t get too excited.\u201d WHAT IT MEANS:  Wow, what a housing number.  At least that was the initial reaction … Continue reading December Housing Starts and Permits, Industrial Production and November Job Openings<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1643","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1643","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1643"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1643\/revisions"}],"predecessor-version":[{"id":1644,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1643\/revisions\/1644"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1643"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1643"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1643"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}