a brief synopsis of this week's economic reports...
there were three widely followed reports on April data this week; the consumer price index from the Bureau of Labor Statistics, the New Residential Construction report from the Census Bureau, and the report on existing home sales from the National Association of Realtors....we also saw the release of two regional Fed manufacturing indexes for May; the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest composite index at 6.7 for May, down slightly from 7.5 in April and indicating an ongoing modest expansion in the region, and the Kansas City Fed manufacturing survey for May, covering a region that includes western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, and which reported its broadest composite index fell to -13 in May, down from -7 in April and -4 in March, indicating a deepening regional contraction, as every sub-index remained negative...in addition, the Chicago Fed released their National Activity Index (CFNAI)for April, which is a weighted composite index of 85 different economic metrics, and which rose to –0.15 in April from –0.36 in March, while the index for March was revised from -0.42 to -0.36...the CFNAI index is constructed so a zero value indicates economic growth at the historical trend rate, so the negative readings for the past 4 months indicate growth below trend...
Consumer Prices up 0.1% in April, Down 0.2% Year over Year
consumer prices managed a small gain in April despite lower prices for groceries, clothing, and gasoline...the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose 0.1% in April after rising 0.2% in both March and February while falling in each of the 5 months prior to that...the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose to 236.599 in April from 237.433 in March, a reading 0.20% lower than the 237.072 reading from April of last year...since the drops in food and energy prices were the major drags on the index in April, core prices, which exclude food and energy, rose by 0.3% in April, as the unadjusted core index rose to 241.802, a level 1.81% ahead of its year ago reading...
the seasonally adjusted energy price index fell by 1.3% in April after rising a total of 2.1% over the prior two months; nonetheless, energy prices are still 19.4% lower than they were in April a year ago...prices for energy commodities were 1.9% lower while the index for energy services fell 0.5%...energy commodity price decreases included a 1.7% drop in the price of gasoline, the largest component, and a 8.4% drop in fuel oil prices, while prices for other fuels, including propane, kerosene and firewood, averaged a 0.8% increase…within energy services, the index for utility gas service, down every month so far this year, fell by another 2.6%, leaving gas priced 16.3% below a year ago, while the electricity price index was unchanged after falling 1.1% in March...energy commodities are now priced 31.2% below their year ago levels, with gasoline down 31.7%, while the energy services price index is now 1.2% lower than last April...
the seasonally adjusted food index was statistically unchanged after falling 0.2% in March as prices for food at home fell 0.2% and prices for food away from home rose 0.2%...among food at home categories, prices for dairy and related products fell 0.8% on a 1.4% drop in milk prices, prices for the meat, poultry, fish, and egg group fell 0.7% on a 2.5% drop in pork prices, and prices for cereals and bakery products fell 0.3% on a 1.1% drop in bread prices and 2.4% lower priced cookies...meanwhile, the fruit and vegetable index rose 0.2% on a 1.2% increase in prices for canned fruits and vegetables, while fresh vegetables fell 0.3%...in addition, beverages and beverage materials were 0.5% higher on a 1.6% increase in prices for roast coffee, while the index other foods at home rose 0.1%....the itemized list for prices of over 100 separate food itemsis included at the beginning of Table 2, which gives us a line item breakdown for prices of more than 200 CPI items overall...
among the seasonally adjusted core components of the CPI, which rose by 0.3% in April, the composite of all commodities less food and energy commodities rose by 0.1%, while the composite for all services less energy services rose by 0.3%...higher prices for commodities suggests lower real consumption of them in April in light of last week's flat retail sales report, with the caveat that gasoline and food retail sales will be adjusted separately with their appropriate price change index... otherwise, noteworthy price increases in April included a 2.6% increase in prices for women's outerwear, 2.5% higher prices for window coverings, 1.9% higher prices for hospital services, 1.8% higher lawn and garden services, 1.8% higher prices for recreational vehicles, and 1.5% higher priced liquor at bars; meanwhile, men's outerwear was 4.5% cheaper, TVs were priced 2.6% lower, prices for photography equipment fell 1.9%, telephone hardware fell 1.4% and airfare prices fell 1.3%....In April, only beef prices, 10.2% higher than last year, show an annual double digit gain, while televisions, down 16.2%, telephones, down 13.4%, personal computers, down 10.0% and the aforementioned energy components have all seen their prices fall by more than 10% over the past year...
New Housing Starts Jump 20%, New Permits up 10% in April
the April report on New Residential Construction (pdf) from the Census Bureau estimated that the widely watched count of new housing starts were at a seasonally adjusted annual rate of 1,135,000 in April, which was 20.2 percent (±14.4%) above the revised March estimate of 944,000 annually and 9.2 percent (±10.6%)* above the April 2014 rate of 1,039,000...while reported April housing starts were the most in over 7 years, the asterisk indicates that the Census does not yet have sufficient data to determine whether housing starts rose or fell since last year, but since the month over month starts is clearly outside of the error margin, we can be pretty certain that new home starts in April were higher than the depressed levels of March, which was itself revised higher...as a result, year to date total housing starts are now 5.5% higher than the same months of 2014....the annual rates given here are extrapolated from a survey of a small percentage of permit offices visited by Census field agents, which estimated that 103,600 housing units were started in April, up from 78,800 in March, of which 69,200 were single family houses and 33,300 were units in apartment buildings with 5 or more units...unadjusted March housing starts were revised up from 77,400, and February starts were revised down from the previously revised 63,600 to 61,900...
just as the depressed levels of housing starts in February and March was due to abnormally poor weather conditions, it appears that the weather in April was more conducive to construction than normal as well....April housing completions were at a seasonally adjusted annual rate of 986,000, which was 20.4 percent (±14.1%) above the revised March estimate of 819,000 and 19.4 percent (±15.2%) above the completions level in April of last year...that there was an unusually high level of seasonally adjusted completions of housing that had been started in earlier months during April like indicates that weather was especially conducive to construction, especially in terms of completing those completions which had been delayed since February, when there was an unusual drop in completions...since homes under construction only rose by 1.5% in April to an annual rate of 853,000, it appears that the increase in completions may have at least in part contributed to freeing up builder's resources, allowing for the increase in new starts...
as we've noted previously, the monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new construction trends than the volatile and often revised starts data... in April, Census estimated new permits were issued at a seasonally adjusted annual rate of 1,143,000, which was 10.1 percent (±2.2%) above the revised March rate of 1,038,000 and was 6.4 percent (±2.1%) above the estimate of April in last year....those estimates were extrapolated from the unadjusted estimates which showed 105,000 new permits issued in April, which was up from the estimated 91,300 new permits issued in March, so in addition to the across the board increase in construction activity, there was also a substantial increase in those planning new home construction...
Existing Home Sales Fell 3.1% in April
the National Association of Realtors (NAR) reported that existing home sales fell a seasonally adjusted 3.1% in April, as they project 5.04 million homes would sell over a year if April sales were extrapolated over an entire year, a rate 6.1% higher than the annual rate projected in April of a year ago... the NAR press release, which is titled Existing-Home Sales Lose Momentum in April, is in easy to read plain English, so there's no point in our restating what they already report...however, since the report is entirely seasonally adjusted and at a meaningless annual rate, we'd also want to look at the raw data overview (pdf), which shows that 445,000 homes actually sold in April, up 9.9% from 405,000 in March and up 5.5% from the 422,000 homes that sold in April last year, with double digit increases over March in every region except the South, where home sales were 5.3% ahead of last month's total...that same pdf indicates that the median home selling price for all housing types was $219,400 in April, up from $210,700 in March, and 8.9% higher than the $201,500 median home sales price in April of last year, while the average home sales price was $264,500, up 3.2% from the $256,300 average in March, and up 5.5% from the $250,700 average sales price of April a year ago...for additional information on this report, Bill McBride has two posts, first with a summary of the data, and the then with a brief commentary, and both with multiple graphs...