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Report from
North America
Housing starts continue decline in US and Canada
US Census Bureau data show home building fell again in
January, marking five straight months of declines, even as
mortgage rates moderated and inflation cooled. Housing
starts, a measure of new home construction, fell by 4.5%
in January from December. That’s down 21.4% from a
year ago, according to data released by the Census Bureau.
Starts in January fell to a seasonally adjusted annual rate
of 1.31 million, down from the revised December estimate
of 1.37 million.
Housing starts had big drops in May and July last year
when spiking mortgage rates pushed many prospective
home buyers to the sidelines. Starts bounced back slightly
in August but have been falling since then. The home
building market slowed again last month with fewer new
construction projects as mortgage rates were nearly double
what they had been a year before, said Robert Frick,
corporate economist at Navy Federal Credit Union.
But home builders report a slight improvement in
confidence in the new construction market. Two
consecutive months of improved confidence by builders in
a survey from the National Association of Home Builders
has indicated there is some improvement in building
activity, and provides some positive signs for the housing
market heading into 2023.
In Canada, seasonally adjusted annualized figures show
starts declined 13% to 215,365 units from December’s
pace of 248,296 units. The six-month trend in starts also
declined for the month, off 4% from December.
The decline comes amid growing concern that a chronic
housing supply shortage has driven up real estate prices
and rents to unaffordable levels in recent years.
See:https://vancouversun.com/real-estate/housing-starts-ratelowest-since-2020/wcm/32450cad-23ee-49c4-9721-c6596dbf3608
Existing home sales fell in January
Existing-home sales waned for the 12th consecutive month
to a seasonally adjusted annual rate of 4.00 million. Sales
slipped 0.7% from December 2022 and 36.9% from the
previous year.
“Home sales are bottoming out,” said National
Association of Realtors Chief Economist Lawrence Yun.
“Prices vary depending on a market’s affordability, with
lower-priced regions witnessing modest growth and more
expensive regions experiencing declines.”
Existing-home sales in the Northeast retracted 3.8% from
December to an annual rate of 500,000 in January, down
35.9% from January 2022. In the Midwest, existing-home
sales slid 5.0% from the previous month to an annual rate
of 960,000 in January, declining 33.3% from one year ago.
Existing-home sales in the South rose 1.1% in January
from December to an annual rate of 1.82 million, a 36.6%
decrease from the prior year. And, In the West, existinghome
sales rose 2.9% in January to an annual rate of
720,000, down 42.4% from the previous year.
“Inventory remains low, but buyers are beginning to have
better negotiating power,” Yun added. “Homes sitting on
the market for more than 60 days can be purchased for
around 10% less than the original list price.”
See:
https://www.nar.realtor/newsroom/existing-home-salesdescended-0-7-in-january
Consumers kept US out of recession
Defying high inflation and sharp interest rate hikes,
Americans keep spending, a trend that, if sustained, could
keep the economy humming just enough to help avoid a
much-predicted recession.
Real gross domestic product (GDP) increased at an annual
rate of 2.9% in the fourth quarter of 2022 according to the
"advance" estimate released by the U.S. Department of
Commerce. This follows a 3.2% real GDP increase in the
third quarter.
The increase in real GDP reflected increases in private
inventory investment, consumer spending, federal
government spending, state and local government
spending, and nonresidential fixed investment that were
partly offset by decreases in residential fixed investment
and exports. Imports, which are a subtraction in the
calculation of GDP, decreased.
"If you look at the GDP data it does seem like we left
2022 with a little bit more momentum than people had
thought and with consumption we're also in a pretty good
spot,” said Sameer Samana, Senior Global Market
Strategist at the Wells Fargo Investment Institute.
Nearly three years after the pandemic caused a brief but
brutal recession and then a powerful rebound, the
economy appears to have entered a phase in which growth
might not be so forceful as to fuel high inflation. One
reason is that consumers are continuing to spend — just
not at breakneck speed.
See:
https://www.bea.gov/data/gdp/gross-domestic-product
Consumer sentiment at 13month high
Easing inflation and a strong labor market are helping
consumers feel better about the economy, according to a
closely watched survey by the University of Michigan.
The preliminary consumer sentiment index for February
increased to 66.4 from 64.9 in January, the university
reported February 10. That's the best reading since January
2021, when the index read 67.2. Sentiment has been
buoyed by the recent cooldown in inflation and continued
strong economic data — especially the job market, said
Joanna Hsu, director of the university's Surveys of
Consumers.
"As long as consumers still believe that their incomes are
going to remain strong, I think that will continue to lift
consumer sentiment and their willingness to spend," Hsu
said.
See:
http://www.sca.isr.umich.edu/
Unexpected hiring boom in January
Employers added a booming 517,000 jobs in January as
hiring unexpectedly surged despite high inflation, rising
interest rates and the prospect of a weakening economy.
Economists surveyed by Bloomberg had forecast 185,000
job gains.
The U.S. unemployment rate fell from 3.5% to 3.4%—the
lowest since 1969—as widespread job growth was led by
gains in leisure and hospitality, professional and business
services, and health care. Construction added 25,000 jobs
in January, reflecting an employment gain in specialty
trade contractors (+22,000). Employment in the
construction industry grew by an average of 22,000 per
month in 2022. Manufacturing employment also continued
to trend up in January (+19,000).
In 2022, manufacturing added an average of 33,000 jobs
per month. Job growth in the fall was also stronger than
initially believed. Employment gains for November and
December were revised upward by a total of 71,000.
See:
https://www.bls.gov/news.release/empsit.nr0.htm
Manufacturing shrinks - wood products hit hard
Economic activity in the US manufacturing sector
contracted in January for the third consecutive month
following a 28-month period of growth, say the nation's
supply executives in the latest Manufacturing ISM Report
On Business.
Of the 18 manufacturing categories surveyed by ISM, 15
reported contraction, with the Wood Products industry
reporting the highest level of contraction.
See:https://www.ismworld.org/supply-management-news-andreports/reports/ism-report-on-business/
North American furniture market projected to hit
US$400 Billion by 2030
According to a new report the North American furniture
market is projected to grow this decade from $249.4
billion in 2020 to $400.07 billion by 2030, registering a
compound annual growth rate (CAGR) of 4.9% from 2021
to 2030.
The Allied Market Research report, titled “North America
furniture Market by Type and Distribution Channel:
Opportunity Analysis and Industry Forecast, 2021–2030,”
projects the residential segment in the furniture market to
have the highest market share during the forecast period.
However, the report states the commercial segment is
expected to grow comparatively faster than other types,
witnessing a CAGR of 5.1%.
According to the report, the furniture market is driven by
various factors such as a rise in disposable incomes,
growth of real estate and hospitality industries, and
demand for luxury and premium furniture from certain
consumer sections. Furthermore, increased government
investments in infrastructure development are projected to
improve furniture demand in the residential and
commercial sectors in the near future.
See:
https://www.alliedmarketresearch.com/north-americafurniture-market-A14565
Disclaimer: Though efforts have been made to ensure
prices are accurate, these are published as a guide only.
ITTO does not take responsibility for the accuracy of this
information.
The views and opinions expressed herein are those of
the correspondents and do not necessarily reflect those
of ITTO
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