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Report from
North America
Severe February weather sets back US housing starts
US homebuilding dropped to a six-month low in February
as severe cold gripped many parts of the country, a
temporary setback for a housing market that remains
supported by extremely lean inventories amid strong
demand for larger homes.
The report from the US Department of Commerce also
showed a sharp decline in building permits last month. It
followed on the heels of data showing that the deep freeze,
which was most severe in Texas and other parts of the
densely populated South region, depressed retail sales and
output at factories.
Housing starts fell 10.3% to a seasonally adjusted annual
rate of 1.421 million units in February, the lowest level
since last August. Starts were down 9.3% on a year-onyear
basis in February.
Groundbreaking activity plunged in the Northeast,
Midwest and South, but surged in the West. Permits for
future home building tumbled 10.8% to a rate of 1.682
million units in February month. They, however, have
increased 17% compared to February 2020, underscoring
the housing market¡¯s strength.
Single-family homebuilding, the largest share of the
housing market, declined 8.5% to a rate of 1.040 million
units in February, also a six-month low. Single-family
building permits tumbled 10.0% to a rate of 1.143 million
units.
The year-long Covid-19 pandemic has shifted demand
toward bigger and more expensive houses as millions of
Americans continue to work at home and remote
schooling remains in place in many communities.
But challenges for the housing market, one of the main
drivers of the economic recovery, are mounting. The 30-
year fixed-rate mortgage has risen to an eight-month high
of 3.05%, according to data from mortgage finance agency
Freddie Mac.
Canadian housing starts fell 13.5% in February compared
with the previous month on decreases of both multiple and
single-detached urban starts, according to the Canadian
Mortgage and Housing Corporation. The seasonally
adjusted annualized rate of housing starts fell to 245,922
units from a revised 284,372 units in January.
See:
https://www.census.gov/construction/nrc/pdf/newresconst.pdf
Existing home sales fall sharply as supply dries up
Sales of existing US homes in February dropped a largerthan-
expected 6.6% compared with January according to
the National Association of Realtors. That put sales at a
seasonally adjusted annualised rate of 6.22 million units,
which was 9.1% higher compared with February 2020.
Despite seeing a historically busy spring housing market
homeowners are not listing their properties for sale at the
pace they normally would this time of year. The supply of
homes for sale fell 29.5% year over year, the largest
annual decline ever, to 1.03 million homes.
Regionally, existing home sales fell 11.5% month-tomonth
in the Northeast. They fell 14.4% in the Midwest
and were 6.1% lower in the South. The West saw a
monthly gain of 4.6%.
US manufacturing expands to a three-year high
The US manufacturing sector expanded yet again in
February. The sector has been performing well ever since
the economy started reopening following the COVID-19
lockdown. February¡¯s rise in manufacturing activity marks
the ninth straight month of gains for the sector, according
to the Institute for Supply Management (ISM).
According to the ISM March 1 report, Manufacturing
Purchasing Managers Index (PMI) hit a three-year high of
60.8%. The ISM PMI has remained above 50% since June
2020. Anything above 50% indicates expansion in
manufacturing activities. The March reading is equal to
that of February 2018.
Manufacturing activity has been gathering steam ever
since the economy reopened and started this year on a high
following the coronavirus vaccine rollout. The vaccination
drive is in full swing and at the same time, new cases and
deaths have been on the decline in recent weeks.
While still among the industries reporting growth the
Wood Products and Furniture industries are no longer
among the fastest growing US industries as they were for
much of 2020. One ISM Wood Products survey
respondent cited costs as a concern saying ¡°Prices are
rising so rapidly that many are wondering if [the situation]
is sustainable.
Shortages have the industry concerned for supply going
forward, at least deep into the second quarter."
See:https://www.ismworld.org/supply-management-news-andreports/reports/ism-report-on-business/pmi/february/
US job growth surges
US employers added more jobs than forecast in February
and the unemployment rate declined suggesting the labour
market is recovering after several disappointing months.
Payrolls increased 379,000 after an upwardly revised
166,000 January increase according to US Department of
Labour. Economists in a Bloomberg survey had projected
a 200,000 February gain. The unemployment rate dropped
to 6.2%.
A decline in Covid-19 cases, along with an easing of
business restrictions in some states, is starting to result in
more hiring even as millions of Americans remain
unemployed. The report adds to recent evidence, including
data on manufacturing and retail sales, that the economy is
gaining momentum.
Stimulus payouts and vaccination roll-out boost
consumer sentiment
The initial reading of US consumer sentiment jumped to
83 in early March according to an index produced by the
University of Michigan. That is the highest level since
economic activity was curtailed due the COVID-19
pandemic.
Anticipation of the US$1,400 stimulus checks in President
Joe Biden¡¯s relief package fueled consumer confidence,
University of Michigan researchers said. Sentiment is
improving as COVID-19 cases retreat and more
Americans are vaccinated. About 29% of the US
population has now received at least one dose of vaccine,
according to the CDC.
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