December industrial production and new home construction

the only major reports released this week were the December report on Industrial Production and Capacity Utilization from the Fed, and the November report on New Residential Construction, from the Census Bureau… the week also saw the release of the first two regional Fed manufacturing surveys for January: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index slipped from +19.6 in December to +17.7 in January, still suggesting a strong expansion of First District manufacturing….meanwhile, the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions fell from a revised reading of +27.9 in December to + 22.2 in January, their lowest reading in 5 months, but still indicating a large plurality of the region’s manufacturing firms reported increases in their activity this month…

Industrial Production Rises 0.9% in December After October & November Output Revised Higher

the Fed’s G17 release on Industrial production and Capacity Utilization indicated that industrial production rose by 0.9% in December after falling by a revised 0.1% in November and after rising by a revised 1.8% in October, which together meant that industrial production rose at a 8.2% annual rate in the 4th quarter from the hurricane impacted levels of the 3rd quarter….the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose to 107.5 in December from 106.5 in November, which was revised from the 106.4 reported last month, while at the same time the index for October was revised from 106.1 to 106.6, and the index for September was revised from 104.9 to 104.8….year over year industrial production is now up 3.6%, up from last month’s 3.4% year over year increase….

the manufacturing index, which accounts for more than 77% of the total IP index, was unchanged at 103.2 in December but was reported 0.2% higher, after the November index was revised down to 103.0, while indices for prior months went statistically unrevised….meanwhile, the mining index, which includes oil and gas well drilling, rose from 111.8 in November to 113.6 in December, after the November index was revised down from 111.9, which lifted the mining index to a level 11.5% higher than it was a year earlier…finally, the utility index, which often fluctuates due to above or below normal temperatures, rose by 5.6% in December,  from 102.3 to 108.1, after the November utility index was revised from 101.6 to 102.3, now 3.1% lower than October…since December 2016 was also colder than normal, meaning the utility index was elevated due to more heating, the utility index is just 1.8% higher than it was a year ago…

this report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization for total industry rose to 77.9% in December from 77.2% in November, which was revised from the 77.0% reported last month …capacity utilization of NAICS durable goods production facilities rose from an upwardly revised 76.0% in November to 76.1% in December, while capacity utilization for non-durables producers slipped from an unrevised 78.0% to 77.9%…capacity utilization for the mining sector rose to 86.5% in December from 84.4% in November, which was originally reported as 84.5%, while utilities were operating at 80.4% of capacity during December, up from their 76.2% of capacity during November, which was previously reported at 75.1%…for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories…. 

Housing Starts Down in December, Permits Little Changed

the December report on New Residential Construction (pdf) from the Census Bureau estimated that the number of new housing units started in December was at a seasonally adjusted annual rate of 1,192,000, which was 8.2 percent (±7.7 percent) below the revised November estimated annual rate of 1,299,000 housing units started, and was 6.0 percent (±11.7 percent)* below last December’s annual rate of 1,268,000 housing starts…the asterisk indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell over the past year, with the figure in parenthesis the most likely range of the change indicated; in other words, December housing starts could have been up by 5.7% or down by as much as 17.7% from those of last December, with revisions of a greater magnitude in either direction possible…in this report, the annual rate for November housing starts was revised from the 1,297,000 reported last month to 1,299,000, while October starts, which were first reported at a 1,290,000 annual rate, were revised from last month’s initial revised figure of 1,256,000 annually to a 1,261,000 annual rate with this report….

those annual rates of starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 80,300 housing units were started in December, down from the 89,100 units that were started in November…of those housing units started in December, an estimated 54,300 were single family homes and 25,700 were units in structures with more than 5 units, down from the revised 69,300 single family starts in November and down from the 28,100 units started in structures with more than 5 units in November…

the monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data…in December, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,302,000, which was 0.1 percent (±1.4%)* below the revised November rate of 1,303,000 permits, but was 2.8 percent (±1.9 percent) above the rate of building permit issuance in December a year earlier…the annual rate for housing permits issued in November was revised up from the originally reported 1,298,000….again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 93,200 housing units were issued in December, down from the revised estimate of 97,000 new permits issued in November…the December permits included 56,500 permits for single family homes, down from 62,000 single family permits issued in November, and 33,900 permits for housing units in apartment buildings with 5 or more units, up from 31,900 such multifamily permits a month earlier… for more graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts decreased to 1.192 Million Annual Rate in December and Comments on December Housing Starts


(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most from the aforementioned GGO posts, contact me…)   
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