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Report from
North America
US manufacturing goes into reverse
Economic activity in the US manufacturing sector
contracted in April after one month of expansion
following 16 consecutive months of contraction, say the
nation's supply executives in the latest Manufacturing ISM
‘Report On Business’. The Manufacturing PMI registered
49.2% in April, down 1.1 percentage points from the
50.3% recorded in March and below the 50% level that
signifies growth.
Timothy Fiore, head of the ISM factory survey committee,
said he would be surprised if the headline index didn’t rise
above 50 next month.
“We remain in the early stages of the growth cycle. This is
one of those bumps we talked about,” Fiore told reporters
after the data was released.
Fiore added that the drop in demand in April was due to
unusual weakness in the food and beverage sector.
Nine manufacturing industries reported growth in April
while seven reported contraction with both the Wood
Products sector and the Furniture & Related Production
sector reporting contraction. However, ISM predicted the
Furniture & Related Products category will report revenue
increases for the rest of 2024 as the US economy softly
expands.
See:https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/october/
Consumers expect higher inflation and home price
growth
In a press release the Federal Reserve Bank of New
York’s Center for Microeconomic Data released the April
2024 ‘Survey of Consumer Expectations’ which shows
that inflation expectations increased in the short-term and
longer-term horizon while decreasing at the medium-term
horizon.
Home price growth expectations reached the highest level
since July 2022. Spending growth expectations also
increased. The average perceived likelihood of voluntary
and involuntary job separation declined, as did the
perceived likelihood of finding a job in the event of a job
loss.
See:
https://www.newyorkfed.org/newsevents/news/research/2024/20240513
Housing starts rebounded in April
Construction of new homes in the US rose 5.7% in April,
as builders ramped up new projects. The pace of
construction accelerated as builders try to meet pent-up
home-buying demand while mortgage rates are poised to
fall over the coming months.
US housing starts rose to a 1.36 million annual pace from
1.29 million in March, the US Department of Commerce
reported. The rebound in April was only partial,
recovering from a sharp plunge the month before, when
housing starts fell by nearly 17%. All numbers are
seasonally adjusted.
Single-family housing starts, which account for the bulk of
homebuilding, slipped 0.4% to an annual rate of 1.031
million units last month. Starts for housing projects with
five units or more soared 31.4% to a rate of 322,000 units
in April.
“April’s rebound was driven by a jump in multi-family
starts, but that was somewhat expected given they had
fallen to their lowest level since April 2020 and, despite
the bounce, remain at very low levels,” economist Thomas
Ryan wrote.
The annual pace of housing starts in Canada edged down
1.0% in April compared with March. The seasonally
adjusted annual rate of housing starts in Canada came in at
240,229 units for April, down from 242,267 in March,
according to a report by the Canada Mortgage and
Housing Corporation (CMHC). The downward trend in
housing starts was largely driven by fewer multi-unit
starts, particularly in Ontario, said CMCH chief economist
Bob Dugan.
See:
https://www.census.gov/construction/nrc/current/index.html
and
https://www.cmhc-schl.gc.ca/
Existing home sales fell for second straight month in
April
Existing home sales in the US unexpectedly fell in April
as higher mortgage rates and house prices weighed on
demand, dealing another setback to the housing market.
Home sales slipped 1.9% last month to a seasonally
adjusted annual rate of 4.14 million units, the National
Association of Realtors reported. Sales also dipped 1.9%
from one year ago. Economists polled by Reuters had
forecast home resales would rise to a rate of 4.21 million
units.
Housing inventory increased 9% to 1.21 million units last
month. Supply jumped 16.3% from one year ago. The rise
in inventory was concentrated in homes priced $1 million
or more, where supply rose 34% from a year ago.
"Home sales changed little overall, but the upper-end
market is experiencing a sizable gain due to more supply
coming onto the market," said NAR Chief Economist
Lawrence Yun.
Existing-home sales in the Northeast fell 4% from March
to an annual rate of 480,000 in April, a decline of 4% from
April 2023. In the Midwest, existing-home sales slipped
1% from one month ago to an annual rate of 1 million in
April, down 1% from one year ago.
Existing-home sales in the South descended 1.6% from
March to an annual rate of 1.9 million in April, down
3.1% from the prior year. In the West, existing-home sales
dropped 2.6% from a month ago to an annual rate of
760,000 in April, an increase of 1.3% from one year
before.
See:
https://www.nar.realtor/newsroom/existing-home-sales-retreated-1-9-in-april
US job growth slows
US payroll growth slowed substantially in April as
employers added 175,000 jobs amid high interest rates and
stubborn inflation, while average pay increases fell to a
three-year low.
The unemployment rate rose from 3.8% to 3.9%, the U.S.
Department of Labor reported. Economists had estimated
a 250,000 jobs gain, according to a Bloomberg survey.
Employment gains for February and March were revised
down by 22,000 jobs. And while job creation in April was
still solid by historical standards, the report portrays a
broadly cooling labor market that should be welcomed by
a Federal Reserve seeking to curtail high inflation. The
economy added a monthly average of 269,000 jobs in the
previous three months and 251,000 in 2023.
Despite the pullback in April, "overall, the numbers are
strong," Acting Labor Secretary Julie Su said in an
interview. She added that many economists expected a
sharper slowdown in job growth because of high inflation
and interest rates.
Construction employment changed little in April (+9,000),
following an increase of 40,000 in
March. Over the prior 12 months, construction had added
an average of 22,000 jobs per month.
Employment also showed little change over the month in
other major industries, including manufacturing,
quarrying, oil and gas extraction, and mining.
See:https://www.bls.gov/news.release/empsit.nr0.htm
and
https://www.usatoday.com/story/money/2024/05/03/april-jobs-report-numbers/73548184007/
Consumer sentiment tilts lower as household
concerns increase
US consumer sentiment retreated about 13% in May
following three consecutive months of very little change.
The latest University of Michigan report shows a troubling
drop in consumer confidence, signaling potential weakness
in household finances alongside a worrying increase in
consumer inflation expectations.
“This 10 index-point decline is statistically significant and
brings sentiment to its lowest reading in about six
months,” Surveys of Consumers Director Joanne Hsu,
said. “While consumers had been reserving judgment for
the past few months, they now perceive negative
developments on a number of dimensions.”
Hsu emphasized that consumers are expressing concerns
about the possibility of inflation, unemployment, and
interest rates all trending unfavorably in the upcoming
year.
See:
http://www.sca.isr.umich.edu/
Increased tariffs on select imports from China
US President Joe Biden in mid-May directed his Trade
Representative to increase tariffs under Section 301 of the
Trade Act of 1974 on US$18 billion of imports from
China to “protect American workers and businesses.”
While the tariff hike did not affect wood products and was
carefully targeted at strategic sectors, some fear the move
could result in retaliation from China and a return to the
trade wars of recent years. However, initial response from
China has been restrained.
See:https://www.whitehouse.gov/briefing-room/statements-releases/2024/05/14/fact-sheet-president-biden-takes-action-to-protect-american-workers-and-businesses-from-chinas-unfair-trade-practices/
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