August’s industrial production, new home construction and existing home sales

The widely watched monthly reports that were released this past week were the August Industrial Production and Capacity Utilization report from the Fed, the August report on New Residential Construction from the Census Bureau and the Existing Home Sales Report for August from the National Association of Realtors (NAR)…in addition, the Bureau of Labor Statistics released the Regional and State Employment and Unemployment report for August, which breaks down the two surveys of the monthly employment report by state and region…and the week also saw the release of the first two regional Fed manufacturing surveys for September: the Empire State Manufacturing Survey from the New York Fed, which covers New York, northern New Jersey and Puerto Rico, reported their headline general business conditions index fell from +4.8 in August to +2.0 in September, suggesting even slower growth of First District manufacturing, while the Philadelphia Fed Manufacturing Survey for September, covering most of Pennsylvania, southern New Jersey, and Delaware, reported their broadest diffusion index of manufacturing conditions fell from +16.8 in August to +12.0 in September, suggesting a more modest growth rate for that region’s manufacturing…   

Industrial Production Up 0.6% in August

The Fed’s G17 release on Industrial production and Capacity Utilization report indicated that industrial production rose by 0.6% in August, after falling by a revised 0.1% in July…however, even with that increase, industrial production is now up just 0.4% from a year ago, down from last month’s 0.5% year over year increase….the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose to 109.9 in August from 109.2 in July, which was unchanged from what was reported for July a month ago…similarly, the June reading for the index was reported as unchanged at 109.4… however, the June to July decrease was revised from 0.2% to 0.1%, indicating fractional changes in the June & July indexes that aren’t apparent as they’re reported…

The manufacturing index, which accounts for more than 75% of the total IP index, rose by 0.5%, from 104.5 in July to 105.2 in August, after July’s manufacturing index was revised but unchanged at 104.7, June’s manufacturing index was revised but unchanged at 105.1, and April and May’s manufacturing indexes were both revised but also unchanged from the previous report…with the August increase, the manufacturing index has improved to down by 0.4% from a year ago….meanwhile, the mining index, which includes oil and gas well drilling, rose from 131.7 in July to 133.6 in August, after the July index was revised up from 131.2….however, the year over year change in the mining index declined to 5.1% from the 5.5% increase reported a month ago….finally, the utility index, which often fluctuates due to above or below normal temperatures, rose by 0.6%, from 104.6 in July to 105.2 in August, after the July utility index was revised down from 104.9 in July, and after the June utility index was revised from 101.7 to 100.9…however, since last August was generally warmer than this one, the utility index is 0.4% below its year ago reading of 106.0..

This report also provides capacity utilization figures, which are 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 from 77.5% in July to 77.9% in August…capacity utilization of NAICS durable goods production facilities rose from 75.7% in July to 76.0% in August, after July’s figure was revised up from 75.6%, while capacity utilization for non-durables producers rose from an downwardly revised 76.0% to 76.3%…capacity utilization for the mining sector rose to 90.5% in August from 89.6% in July, which was originally reported as 89.1%, while utilities were operating at 76.7% of capacity during August, up from their 76.4% of capacity during July, which was revised down from 76.6%…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…. 

New Housing Construction and New Building Permits at a 12 Year Highs in August

The August report on New Residential Construction (pdf) from the Census Bureau estimated that the widely watched count of new housing units that were started during the month was at a seasonally adjusted annual rate of 1,364,000, which was the highest reported in 12 years, 12.3  percent (±10.2 percent) above the revised July estimated annual rate of 1,215,000 housing unit starts, and 6.6 percent (±11.6 percent)* above last August’s pace of 1,279,000 housing starts a year…however, 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, August’s housing starts could have been down by 5.0% or up by as much as 18.2% from those of last August, with a 10% chance that the actual change could have even been outside of that wide range…in this report, the annual rate for July housing starts was revised from the 1,191,000 reported last month  to 1,215,000, while June starts, which were first reported at a 1,253,000 annual rate, were revised down from last month’s initial revised figure of 1,241,000 annually to 1,233,000 annually 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 Census field agents, which estimated that 121,100 housing units were started in August, up 4.8% from the 115,500 units started in July…of those housing units started in August, an estimated 82,500 were single family homes and 36,700 were units in structures with more than 5 units, down from the revised 84,900 single family starts in July, but up from the 29,600 units started in structures with more than 5 units in July…

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 August, Census estimated new building permits were being issued for a seasonally adjusted annual rate of 1,419,000 housing units, a 12 year high, which was  7.7 percent (±1.2 percent) above the revised July rate of 1,317,000 permits, and was 12.0 percent (±1.6  percent) above the rate of building permit issuance in August a year earlier…the annual rate for housing permits issued in July was revised from 1,336,000 to a rate of 1,317,000 annually….again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected by canvassing census agents, which showed permits for roughly 127,000 housing units were issued in August, up from the revised estimate of 118,800 new permits issued in July…the August permits included 78,100 permits for single family homes, down from 78,200 in July, and 44,900 permits for housing units in apartment buildings with 5 or more units, up from 36,500 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 increase to 1.364 Million Annual Rate in August, Highest in 12 Years and Comments on August Housing Starts

August Existing Home Sales Up 1.3%

The National Association of Realtors (NAR) reported that their seasonally adjusted count of existing home sales rose 1.3% from July to August, projecting that 5.49 million homes would sell over an entire year if the August home sales pace were extrapolated over that year, a pace that was also 2.6% above the 5.35 annual sales rate they projected in August of a year ago….July sales, at a 5.42 million annual rate, were revised but unchanged from last month’s report…the NAR also reported that the median sales price for all existing-home types was $278,200 in August, 4.7% higher than in August a year earlier, which they report as “the 90th straight month of year-over-year gains“…..the NAR press release, which is titled “Existing-Home Sales Increase 1.3% in August“, is in easy to read plain English, so if you’re interested in the details on housing inventories, cash sales, distressed  sales, first time home buyers, etc., you can easily find them in that press release…as sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered during the selling process…

Since this report is entirely seasonally adjusted and at a not very informative annual rate, we like to look at the raw data overview (pdf), which gives us a close approximation to the actual number of homes that sold each month…this unadjusted data indicates that roughly 534,000 homes sold in August, down by 1.1% from the 540,000 homes that sold in July, and down by 0.9% from the 539,000 homes that sold in August of last year, so we can see that it was the seasonal adjustment that caused the annualized published figures up to show increases…that same pdf indicates that the median home selling price for all housing types fell 0.8%, from a revised $280,400 in July to $278,200 in August, while the national average home sales price was $314,600, down 0.7% from the $316,800 average in July, but up 3.5% from the $304,000 average home sales price of August a year ago, with the regional average home sales prices ranging from a low of $247,100 in the Midwest to a high of $426,600 in the West….for both seasonally adjusted and unadjusted graphs and additional commentary on this report, check out the following two posts from Bill McBride at Calculated Risk: NAR: Existing-Home Sales Increased to 5.49 million in August and Comments on August Existing Home Sales

 

(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 picked from the aforementioned GGO posts, contact me…)

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