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Report from
North America
Housing starts fall in January amid freezing weather
Homebuilding fell more than expected in January as many
parts of the country experienced freezing temperatures, but
a surge in permits suggested a rebound in the coming
months was likely amid a severe shortage of homes on the
market.
Housing starts dropped 4.1% to a seasonally adjusted
annual rate of 1.638 million units in January the US
Department of Commerce reported.
Single-family housing starts, which account for the biggest
share of homebuilding, dropped 5.6% to a rate of 1.116
million units last month. Single-family homebuilding fell
in the Northeast, Midwest, and South, but rose in the
West.
Permits for future homebuilding in January rose 0.7% to a
rate of 1.899 million units, the highest since 2006. Singlefamily
building permits surged 6.8% to a rate of 1.205
million units. The supply of previously owned homes on
the market is at record lows, which should keep builders
busy.
But builders are facing challenges from soaring prices for
inputs. Prices for softwood lumber, which is used for
framing, shot up 25.4% in January after a 21.3% rise in
December according to the U.S. Department of Labor.
Last November the U.S. nearly doubled the duties on
imported Canadian softwood lumber after a review of its
anti-dumping and countervailing duty orders.
Canadian housing starts also fell in January as the
standalone monthly seasonally adjusted annual rate of total
housing starts dropped to 230,754 units, a decrease of 3%
from 238,405 units in December. Multiple urban starts
decreased by 9% to 144,332 units, while single-detached
urban starts increased by 7% to 60,096 units.
Home sales surged as year began
Home sales unexpectedly increased in January but
investors paying in cash are squeezing out first-time
buyers from the housing market amid record low
inventory and higher prices.
The surge in sales of previously owned homes last month
reported by the National Association of Realtors likely
reflected buyers rushing in to close on contracts in
anticipation of mortgage interest rates rising further.
Mortgage interest rates have climbed to levels not seen
since 2019 as the Federal Reserve is expected to start
increasing interest rates next month to tame soaring
inflation. Economists are anticipating as many as seven
rate hikes this year.
Existing home sales surged 6.7% to a seasonally adjusted
annual rate of 6.50 million units last month with sales
rising in all four regions.
Existing-home sales in the Northeast grew 6.8% in
January, posting an annual rate of 780,000, an 8.2%
decline from January 2021.
Existing-home sales in the Midwest rose 4.1% from the
prior month to an annual rate of 1,510,000 in January,
equal to the level seen from a year ago. In the South,
existing-home sales jumped 9.3% in January from the
prior month, reporting an annual rate of 2,940,000, a gain
of 0.3% from one year ago.
Existing-home sales in the West increased 4.1% from the
previous month, registering an annual rate of 1,270,000 in
January, down 6.6% from one year ago.
See:
https://www.nar.realtor/newsroom/existing-home-salessurge-6-7-in-january
GDP grew at a strong pace to close out 2021
The US economy grew at a better-than-expected pace at
the end 2021 due to sizeable boosts in inventories and
consumer spending and despite signs that the acceleration
likely tailed off toward the end of the year.
Gross domestic product, the sum of all goods and services
produced during the October-through-December period,
increased at a 6.9% annualized pace, the U.S. Department
of Commerce reported.
The increase was well above the unrevised 2.3% growth in
the third quarter and came despite a surge in Covid
omicron cases that likely slowed hiring and output as
businesses dealt with large numbers of sick workers.
The quarter brought an end to a 2021 that saw a 5.7%
increase in annualized GDP, the strongest pace since 1984
as the U.S. tried to pull away from the unprecedented drop
in activity during the early days of the coronavirus
pandemic.
Payrolls show surprising January gain despite
omicron
Job growth increased far more than expected in January
despite surging omicron cases that seemingly sent millions
of workers to the sidelines, the U.S. Department of Labor
reported.Non-farm payrolls surged by 467,000 for the
month, while the unemployment rate edged higher to 4%,
according to the U.S. Bureau of Labor Statistics. The
stunning gain came a week after the White House warned
that the numbers could be low due to the pandemic.
Covid cases, however, have plunged nationally in recent
weeks, with the seven-day moving average down more
than 50% since peaking in mid-January, according to the
U.S. Centers for Disease Control and Prevention.
Most economists had expected January¡¯s number to be
tepid due to the virus, though they were looking for
stronger gains ahead.
For January, the biggest employment gains came in leisure
and hospitality. Employment showed little change over the
month in mining, construction, and manufacturing.
Along with the big upside surprise for January, massive
revisions sent previous month¡¯s totals considerably higher.
¡°The benchmark revisions helped the numbers a bit just
because it moved out some of the seasonal factors that
have been at work. But overall the job market is strong,
particularly in the face of omicron,¡± said Kathy Jones,
chief fixed income strategist at Charles Schwab. ¡°It¡¯s hard
to find a weak spot in this report.¡±
Consumer sentiment falls to 10-year low
American consumers began the New Year in a sour mood,
as the University of Michigan¡¯s consumer sentiment index
for February showed a ¡°stunning¡± drop of 8.2% from
January.
The overall index now stands at 61.7, down from 67.2 a
month earlier and 19.7% below what it was a year ago.
The current conditions index stands at 68.5, down from 72
a month ago and more than 20% off from February 2021.
The future expectations index fell to 57.4 from 64.1, an
18.8% drop over the past 12 months.
¡°The recent declines have been driven by weakening
personal financial prospects, largely due to rising inflation,
less confidence in the government's economic policies,
and the least favorable long-term economic outlook in a
decade,¡± Richard Curtin, director of the surveys, said in a
statement, adding that the entire February decline was
among households with incomes of $100,000 or more.
Tension between the U.S. and Russia over Ukraine,
spiking prices on everything from eggs to gas and fatigue
from two years of a global health pandemic are all
weighing on the minds of consumers. Domestic political
divisions over mask mandates, education policy and the
January 6 riot last year at the U.S. Capitol are also preying
on people¡¯s feelings. Despite the mood, most economists
still forecast a fairly strong economy in 2022.
See:
http://www.sca.isr.umich.edu/
Manufacturing growth slows further
A measure of US manufacturing activity fell to a 14-
month low in January amid an outbreak of COVID-19
cases, supporting the view that economic growth lost
steam at the start of the year. But the survey from the
Institute for Supply Management (ISM) marked the third
straight month of signs of improvements in labor and
supplier delivery performance.
The ISM's index of national factory activity dropped to a
reading of 57.6 last month, the lowest since November
2020, from 58.8 in December. A reading above 50
indicates overall growth.
Of the 18 manufacturing sectors followed by ISM,
Furniture and Related products was among the sectors
with the highest gains in January.
Furniture reported growth in several categories, including
new orders, production, in which it led all industries,
employment, supplier deliveries, higher inventories, order
backlogs, and imports. The Wood Products sector saw
neither a gain nor a loss in January but did report an uptick
in production.
See:https://www.ismworld.org/supply-management-news-andreports/reports/ism-report-on-business/pmi/december/
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