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Report from
North America
Housing starts rise but permits for future construction
lag
US homebuilding increased more than expected in June
but permits for future home construction fell to an eightmonth
low, likely reflecting uncertainty caused by
expensive building materials as well as shortages of labour
and land.
The monthly report from the US Department of
Commerce suggested that a severe shortage of houses,
which has boosted prices and sparked bidding wars across
the country, could persist.
Housing starts rose 6.3% to a seasonally adjusted annual
rate of 1.643 million units last month. Data for May was
revised down to a rate of 1.546 million units from the
previously reported 1.572 million units. Despite last
month's increase, starts remained below March's rate of
1.737 million units, which was the highest level since July
2006.
Homebuilding increased in the West and the populous
South but fell in the Northeast and Midwest. Permits for
future homebuilding fell 5.1% to a rate of 1.598 million
units in June, the lowest level since October 2020.
While Canadian housing starts edged downward in June,
they remained above market expectations and the level of
building activity remains elevated by historical standards.
Housing starts for June came in at a seasonally adjusted
annualized rate of 282,070 units, a 1.5% decrease from
286,296 units in May,
Home sales end four-month slide
After four straight months of declines, sales of previously
owned homes rose 1.4% in June to a seasonally adjust
annualised rate of 5.86 million units according to the
National Association of Realtors. Sales were 23% higher
compared with June 2020. That annual comparison,
according to realtors, is still slightly skewed due to
pandemic lockdowns in certain parts of the country that
lasted into summer last year.
Existing-home sales in the Northeast increased 2.8% in
June, recording an annual rate of 740,000, a 45% rise from
a year ago. Existing-home sales in the Midwest rose 3% to
an annual rate of 1.33 in June, a 19% increase from a year
ago.
Existing-home sales in the South were unchanged from
May, posting an annual rate of 2.59 million in June, up
19% from the same time one year ago. Existing-home
sales in the West rose 1.7%, registering an annual rate of
1.2 million in June, a 24% jump from a year ago. The
inventory of homes for sale at the end of June was 1.25
million, representing a 2.6-month supply at the current
sales pace. That is a slight improvement from May¡¯s 2.5-
month supply.
See:
https://www.nar.realtor/newsroom/existing-home-salesexpand-1-4-in-june
More jobs created in June
Despite widespread worker shortages US hiring
accelerated in June as employers added 850,000 jobs amid
declining COVID-19 cases, a reopening economy and
increasing vaccinations. The unemployment rate, which is
calculated from a different survey of households rose
slightly according to the US Department of Labor.
Up to June, the US has recovered 15.6 million, or 70%, of
the 22.4 million jobs lost last spring, leaving the nation 6.8
million jobs below its pre-pandemic level. Leisure and
hospitality, the industry hit hardest by the pandemic, again
led the gains, adding 343,000 jobs, including 194,000 at
restaurants and bars, as more states ended capacity limits.
Manufacturing, which has been beleaguered by supplychain
bottlenecks, added a modest 15,000 jobs.
The strong June employment gains "despite persistent
hiring strains is likely the start of a series of stellar reports
that will underpin the strongest US economic performance
since 1951" says economist Lydia Boussour of Oxford
Economics. They expect 8 million jobs to be added this
year highlighted by a couple of months with advances of
at least 1 million.
Consumer sentiment drops on inflation fears
Consumer sentiment fell sharply and unexpectedly in early
July to the lowest level in five months as inflation worries
dented confidence in the economic recovery. The
University of Michigan said its preliminary consumer
sentiment index fell to 80.8 in the first half of this month -
the lowest since February - from a final reading of 85.5 in
June.
¡°Consumers¡¯ complaints about rising prices on homes,
vehicles, and household durables has reached an all-time
record,¡± Richard Curtin, the survey director, said in a
statement.
The survey¡¯s gauge of current economic conditions fell to
its lowest reading since August 2020 and its measure of
consumer expectations slid as well.
See:
http://www.sca.isr.umich.edu/
Manufacturing growth slows
US manufacturing activity grew at a moderate pace in
June, slowing somewhat due to rampant shortages of raw
materials and labour. The Institute for Supply
Management (ISM) said its index of national factory
activity slipped to 60.6 last month, the lowest reading
since January, from 61.2 in May. A reading above 50
indicates expansion in manufacturing, which accounts for
11.9% of the US economy.
ISM¡¯s Business Survey Committee panelists reported that
their companies and suppliers continue to struggle to meet
increasing levels of demand.
Record-long raw-material lead times, wide-scale shortages
of critical basic materials, rising commodities prices and
difficulties in transporting products are continuing to
affect all segments of the manufacturing economy.
A survey respondent from the furniture sector said ¡°Other
than material availability/volatility and rising prices, the
outlook for our company is good. We can¡¯t keep up with
the increase in orders and have projects that may require a
second shift to be added temporarily, but that might not be
possible if material availability ¡ª for example, lumber
products ¡ª remains an issue for us.¡±
Perhaps due to costs and availability, of the 18
manufacturing industries surveyed, only Wood Products
reported a decline in new orders in June.
See:https://www.ismworld.org/supply-management-news-andreports/reports/ism-report-on-business/pmi/june/
Lumber prices surge again as wildfires hit production
US lumber futures rose the most in more than a year on
concerns that wildfires in western Canada will reduce
supply and spur more curtailments at sawmills. Lumber
futures jumped more than 7% in Chicago on July 21.
Rail transportation in British Columbia has been hindered
since a June 30 fire damaged the tracks of the two main
railways that carry goods to Vancouver for export causing
congestion at the port. Lines have since been repaired but
rail movement has been slow and sporadically halted due
to fires. British Columbia declared a state of emergency
and Canfor Corp. said it would trim output as the fires
snarl transportation and supply chains.
The rebound in prices extends wild gyrations that took
lumber prices from a record high in May on a pandemicfueled
construction boom to an eight-month low in mid-
July after demand eased and supply was replenished.
British Columbia is Canada¡¯s biggest exporter of lumber
to the US.
Housing starts rise but permits for future construction
lag
US homebuilding increased more than expected in June
but permits for future home construction fell to an eightmonth
low, likely reflecting uncertainty caused by
expensive building materials as well as shortages of labour
and land.
The monthly report from the US Department of
Commerce suggested that a severe shortage of houses,
which has boosted prices and sparked bidding wars across
the country, could persist.
Housing starts rose 6.3% to a seasonally adjusted annual
rate of 1.643 million units last month. Data for May was
revised down to a rate of 1.546 million units from the
previously reported 1.572 million units. Despite last
month's increase, starts remained below March's rate of
1.737 million units, which was the highest level since July
2006.
Homebuilding increased in the West and the populous
South but fell in the Northeast and Midwest. Permits for
future homebuilding fell 5.1% to a rate of 1.598 million
units in June, the lowest level since October 2020.
While Canadian housing starts edged downward in June,
they remained above market expectations and the level of
building activity remains elevated by historical standards.
Housing starts for June came in at a seasonally adjusted
annualized rate of 282,070 units, a 1.5% decrease from
286,296 units in May.
Home sales end four-month slide
After four straight months of declines, sales of previously
owned homes rose 1.4% in June to a seasonally adjust
annualised rate of 5.86 million units according to the
National Association of Realtors. Sales were 23% higher
compared with June 2020. That annual comparison,
according to realtors, is still slightly skewed due to
pandemic lockdowns in certain parts of the country that
lasted into summer last year.
Existing-home sales in the Northeast increased 2.8% in
June, recording an annual rate of 740,000, a 45% rise from
a year ago. Existing-home sales in the Midwest rose 3% to
an annual rate of 1.33 in June, a 19% increase from a year
ago.
Existing-home sales in the South were unchanged from
May, posting an annual rate of 2.59 million in June, up
19% from the same time one year ago. Existing-home
sales in the West rose 1.7%, registering an annual rate of
1.2 million in June, a 24% jump from a year ago.
The inventory of homes for sale at the end of June was
1.25 million, representing a 2.6-month supply at the
current sales pace. That is a slight improvement from
May¡¯s 2.5-month supply.
See:
https://www.nar.realtor/newsroom/existing-home-salesexpand-1-4-in-june
More jobs created in June
Despite widespread worker shortages US hiring
accelerated in June as employers added 850,000 jobs amid
declining COVID-19 cases, a reopening economy and
increasing vaccinations. The unemployment rate, which is
calculated from a different survey of households rose
slightly according to the US Department of Labor.
Up to June, the US has recovered 15.6 million, or 70%, of
the 22.4 million jobs lost last spring, leaving the nation 6.8
million jobs below its pre-pandemic level.
Leisure and hospitality, the industry hit hardest by the
pandemic, again led the gains, adding 343,000 jobs,
including 194,000 at restaurants and bars, as more states
ended capacity limits. Manufacturing, which has been
beleaguered by supply-chain bottlenecks, added a modest
15,000 jobs.
The strong June employment gains "despite persistent
hiring strains is likely the start of a series of stellar reports
that will underpin the strongest US economic performance
since 1951" says economist Lydia Boussour of Oxford
Economics. They expect 8 million jobs to be added this
year highlighted by a couple of months with advances of
at least 1 million.
Consumer sentiment drops on inflation fears
Consumer sentiment fell sharply and unexpectedly in early
July to the lowest level in five months as inflation worries
dented confidence in the economic recovery. The
University of Michigan said its preliminary consumer
sentiment index fell to 80.8 in the first half of this month -
the lowest since February - from a final reading of 85.5 in
June.
¡°Consumers¡¯ complaints about rising prices on homes,
vehicles, and household durables has reached an all-time
record,¡± Richard Curtin, the survey director, said in a
statement.
The survey¡¯s gauge of current economic conditions fell to
its lowest reading since August 2020 and its measure of
consumer expectations slid as well.
See:
http://www.sca.isr.umich.edu/
Manufacturing growth slows
US manufacturing activity grew at a moderate pace in
June, slowing somewhat due to rampant shortages of raw
materials and labour. The Institute for Supply
Management (ISM) said its index of national factory
activity slipped to 60.6 last month, the lowest reading
since January, from 61.2 in May. A reading above 50
indicates expansion in manufacturing, which accounts for
11.9% of the US economy.
ISM¡¯s Business Survey Committee panelists reported that
their companies and suppliers continue to struggle to meet
increasing levels of demand. Record-long raw-material
lead times, wide-scale shortages of critical basic materials,
rising commodities prices and difficulties in transporting
products are continuing to affect all segments of the
manufacturing economy.
A survey respondent from the furniture sector said ¡°Other
than material availability/volatility and rising prices, the
outlook for our company is good. We can¡¯t keep up with
the increase in orders and have projects that may require a
second shift to be added temporarily, but that might not be
possible if material availability ¡ª for example, lumber
products ¡ª remains an issue for us.¡±
Perhaps due to costs and availability, of the 18
manufacturing industries surveyed, only Wood Products
reported a decline in new orders in June.
See:https://www.ismworld.org/supply-management-news-andreports/reports/ism-report-on-business/pmi/june/
Lumber prices surge again as wildfires hit production
US lumber futures rose the most in more than a year on
concerns that wildfires in western Canada will reduce
supply and spur more curtailments at sawmills. Lumber
futures jumped more than 7% in Chicago on July 21.
Rail transportation in British Columbia has been hindered
since a June 30 fire damaged the tracks of the two main
railways that carry goods to Vancouver for export causing
congestion at the port. Lines have since been repaired but
rail movement has been slow and sporadically halted due
to fires. British Columbia declared a state of emergency
and Canfor Corp. said it would trim output as the fires
snarl transportation and supply chains.
The rebound in prices extends wild gyrations that took
lumber prices from a record high in May on a pandemicfueled
construction boom to an eight-month low in mid-
July after demand eased and supply was replenished.
British Columbia is Canada¡¯s biggest exporter of lumber
to the US.
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