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Report from
North America
When can business restart?
Despite the US state of Georgia not seeing a decline in the
number of infections, Georgia Governor Brian Kemp,
announced the reopening of gyms, massage parlors, hair
salons, and other small businesses beginning 24 April with
restaurants and movie theaters to soon follow. Tennessee
and South Carolina planned similar rollbacks of
restrictions as several states saw protests against
coronavirus quarantine measures.
At the same time, many Americans are concerned that
reopening businesses too early could lead to a "second
wave" of infections that end up being worse than the first.
As April comes to a close, the US has surpassed 1 mil.
confirmed cases of infection and deaths have exceeded
50,000.. To guide state governments the White House has
published ¡®Guidelines for Opening Up America Again¡¯
which lays out a phased approach based on quantifiable
milestones.
To shore up the economy, Congress and the White House
have allocated US$2.7 trillion in emergency spending,
including nearly US$650 billion for the Paycheck
Protection Program to provide forgivable loans to small
businesses to keep workers employed.
US temporarily defers some import duties
On 19 April an Executive Order was signed allowing for
the temporary deferral of import duties on some products
where US importers were suffering significant financial
hardship because of the pandemic control measures.
In accordance with the Executive Order, the Secretary of
the Treasury and US Customs and Border Protection will
be postponing certain duties, taxes and fees for 90
calendar days for merchandise that entered in March and
April, after which they will be reintroduced.
This temporary postponement does not apply to duties
owed as part of an antidumping or countervailing duty
order or for those imposed under the Section 301 action on
imports from China.
See:
https://www.whitehouse.gov/presidential-actions/executiveorder-national-emergency-authority-temporarily-extenddeadlines-certain-estimated-payments/
US home construction sharply down in March
US residential building activity collapsed in March as the
coronavirus spread, with housing starts tumbling 22%
from a month earlier.
The Commerce Department said that groundbreakings in
March were at a seasonally adjusted annual rate of 1.2
million units, down from a 1.56 million pace in February.
Construction of single-family houses fell 17.5%, while
apartment and condo starts were off 32% from February.
The drop in housing starts was the worst monthly decline
since the 1980s, when new home construction plunged
26.4% in March 1984. All of this paints a bleak outlook
for housing as the lockdown to contain corona virus has
led more than 20 million Americans losing their jobs in
the past four weeks.
There was a 6% decline in the completion of homes being
constructed which means many homes are being left halfbuilt.
The drop was 15% of single-family houses meaning
that unless economic activity picks up soon there could be
ghost towns of half-built housing developments, a
phenomenon last seen in the aftermath of the 2008
financial crisis. Construction activity will likely continue
to slow. There was also an almost 7% drop in permits to
begin construction in March.
Builder confidence in the market for single-family homes
plunged 42 points to a reading of 30 in April, the lowest
point since June 2012, according to the latest National
Association of Homebuilders/Wells Fargo Housing
Market Index.
Home prices stable and sales volume holding up
Existing-home sales fell in March following a February
that saw significant nationwide gains, according to the
National Association of Realtors. Each of the four major
regions reported a dip in sales, with the West suffering the
largest decrease.
Total existing-home sales dropped 8.5% from February to
a seasonally adjusted annual rate of 5.27 million in March.
Despite the decline, overall sales increased year-on-year
for the ninth straight month, up 0.8% from a year ago
(5.23 million in March 2019).
While sales have declined, home prices are still solidly
strong. The median existing-home price for all housing
types in March was US$280,600, up 8.0% from March
2019 (US$259,700), as prices increased in every region.
March¡¯s national price increase marks 97 straight months
of year-over-year gains.
See:
https://www.nar.realtor/newsroom/home-sales-increaseyear-over-year-despite-expected-monthly-march-sales-declinedue-to-impact-of
US streets are empty but Home Depot is packed
While many businesses in the US are closed due to the
pandemic, homebound citizens are turning to home
improvement projects to keep busy and maintain a sense
of personal control. The Washington Post columnist,
Petula Dvorak, noted that home improvement giants such
as Home Depot and Lowe¡¯s are thriving.
Lowe¡¯s chief executive, Marvin Ellison, said people have
time to undertake home improvements and fix all the
things that had been waiting.
Online Furniture Sales Surge ¨Cretail therapy
The pandemic control measures have boosted online home
decor sales as work-from-home consumers adjust work
spaces for video conferences. Data from the American
Home Furnishings Alliance (AHFA) and Wakefield
Research reveals that 74% of American office
professionals now work from home because of stay-athome
regulations.
Cabinet Sales Up 9.2% for February 2020
According to the Kitchen Cabinet Manufacturers
Association (KCMA)¡¯s monthly Trend of Business
Survey, participating cabinet manufacturers reported an
increase in cabinet sales of 9.2% for February 2020
compared to the same month in 2019. Custom sales
increased slightly at 5.6%, semi-custom increased 3%, and
stock sales were up 14.5%.
The monthly change was also positive with an overall
increase of 10.5% compared to January. Custom sales
were up 10.5%; semi-custom increased 14%, and stock
sales increased 8.3%.Year-to-date cabinet sales are up 7%
overall with custom sales up 7%, semi-custom sales up
1%, and stock sales up 11.4%.
See:
https://www.kcma.org/news/press-releases/february-2020-trend-of-business
Remodeling activity index signals alarm
The National Association of Home Builders¡¯ (NAHB)
redesigned the Remodeling Market Index (RMI) in 2020
to improve its ability to interpret and track industry trends.
The RMI survey now asks remodelers to rate five
components of the remodeling market as ¡°good,¡± ¡°fair¡± or
¡°poor.¡±
Each question is measured on a scale from 0 to 100, where
an index number above 50 indicates a higher share view
conditions as good than poor. The first reading for this
new RMI series was 48 for the first quarter of 2020.
The Current Conditions Index is an average of three
components: the current market for large remodeling
projects, moderately-sized projects, and small projects.
The Future Indicator Index is an average of two
components: the current rate at which leads and inquiries
are coming in and the current backlog of remodeling
projects.
The Current Conditions Index stood at 58, while the
Future Market Indicators Index stood at 39 in the first
quarter of 2020, with the rate at which leads and inquiries
were arriving being just 30 and the backlog of remodeling
jobs at 47.
A separate index is created for the final question in the
survey: How does the overall market for remodeling in the
area where you operate compare to three months ago? This
index stood at 24 in the first quarter of 2020. The low
reading is directly related to the impact of the pandemic.
See:
http://eyeonhousing.org/2020/04/new-index-for-remodelingactivity-debuts-in-q1-2020/
US consumer sentiment plunged in April
The University of Michigan's consumer-sentiment index
plunged by 18 points, to 71, in early April. Over the past
two months, the index has slumped 30 points, roughly
50% down than the previous record.
The slide was led by the current-conditions index, which
plummeted by 31.3 points, nearly double the record fall of
16.6 points set in October 2008. The other component of
overall consumer sentiment, the expectations index, fell by
9.7 points; while the decline was still substantial, it was
not near the record drop of 16.5 in December 1980.
See:
http://www.sca.isr.umich.edu/
US manufacturing contracted in March
Economic activity in the manufacturing sector contracted
in March but the overall economy grew for the 131st
consecutive month according the nation's supply
executives in the latest Manufacturing ISM Report On
Business.
Wood Products was one of the manufacturing industries
reporting growth in March while six others reported
contraction. Comments from the panel that prepare the
report were mostly negative regarding the short-term
outlook with sentiment undermined by the pandemic
control measures and energy market volatility.
See:
https://www.instituteforsupplymanagement.org/ismreport/mfgrob.cfm?SSO=1
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