U.S. economic data this week was generally positive and consistent with an increase in the pace of real GDP growth in the second quarter, following a weak first quarter.
Residential construction data was weaker than expected in April as total housing starts dipped by 2.6 percent to a 1,172,000 unit annual rate. Single-family starts were little changed for the month, easing slightly to an 835,000 unit rate. Multifamily starts (5+ units) dropped by 9.6 percent to a 328,000 unit rate. Multifamily construction has clearly lost momentum.
The National Association of Homebuilders’ Builder Confidence Survey for May showed increasing builder confidence, with expectations of future sales conditions very high.
Industrial production increased in April by 1.0 percent, looking strong in most industry groups and market groups. Manufacturing output increased by 1.0 percent in April as vehicle assemblies increased to an 11.9 million vehicle rate, the strongest assemblies rate so far this year. A sour note for manufacturing came from the Federal Reserve Bank of New York. Their Empire State manufacturing index dropped into negative territory in May, indicating a slight deterioration of regional manufacturing conditions. However, that was countered by the Philadelphia Fed’s manufacturing survey which remained solidly positive for the month.
Labor markets remain tight. Initial claims for unemployment insurance fell by 4,000, to hit 232,000 for the week ending May 13. Continuing claims fell by 22,000 for the week ending May 6, to reach an exceptionally low 1,898,000.
The Conference Board’s Leading Economic Index increased by 0.3 percent in April, as did both the coincident and the lagging indexes. Eight out of 10 components of the leading index were positive in April.
Mortgage applications for the week ending May 12 were soft as purchase apps fell 2.7 percent and refi apps fell 5.7 percent, according to the Mortgage Bankers Association. Their gauge of mortgage rates has been very steady, with a 30-year FRM at 4.23 percent.
U.S. oil inventories eased less than expected for the week ending May 12. Crude oil prices ended the week higher, with WTI crude hitting $50/barrel Friday morning.
For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here: Comerica_Economic_Weekly_ 05192017.