Last Week’s Economic News in Review
Housing starts hit their lowest point in more than two years, while consumer sentiment improved, and layoffs increased.
Starts of new housing construction tumbled to an annual rate of 1,078,000 in December, which was 11.2 percent below November’s pace of 1,214,000 and marked the lowest rate since September 2016, according to last week’s report from the Census Bureau and Department of Housing and Urban Development. Compared to the same period a year ago, December’s housing starts were 10.9 percent lower than December 2017’s rate of 1,210,000.
Starts on single-family homes in December dropped to an annual rate of 758,000, which was 6.7 percent lower than November’s pace of 812,000. Starts on buildings with five units or more fell to a rate of 302,000, which was down 22 percent from November’s rate of 387,000.
Permits to build new homes, an indicator of future housing activity, were mixed. Construction permits dipped to an annual rate of 1,326,000, which was 0.3 percent higher than November’s rate of 1,322,000. Permits for single-family home constructions dropped to 829,000, which was down 2.2 percent from November’s pace of 848,000. Permits issued for buildings with five or more units grew to a rate of 460,000, which was 5.7 percent higher than November’s level of 435,000.
The Index of Consumer Sentiment grew to 93.8 in February, which was up 2.9 percent from January’s score of 91.2, the University of Michigan Surveys of Consumers reported last week. That said, when compared to the same period a year ago, the index was down 5.9 percent from 99.7 in February 2018.
The Index of Current Economic Conditions, which gauges how consumers feel about the current economy, ticked down to 108.5 in February, which was 0.3 percent below January’s score of 108.8, and down 5.6 percent from February 2018’s score of 114.9. The Index of Consumer Expectations, which measures how consumers feel the economy will fare in the near future, grew to 84.4 in February, which was 5.6 percent higher than January’s score of 79.9, but was down 6.2 percent from February 2018’s score of ninety.
“Although sentiment was still above last month’s low, the bounce-back from the end of the Federal shutdown faded in late February,” noted Richard Curtin, the Surveys of Consumers chief economist, in a public statement. “While the overall level of confidence remains diminished, it is still quite positive.”
Initial Jobless Claims
Looking at layoffs, first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending February 23 grew to 225,000, a gain of 8,000 claims from the preceding week’s total of 217,000, the Employment and Training Administration reported last week. This was right in line with economists’ expectations of 225,000 claims.
The four-week moving average, which is considered a more stable measure of jobless claims, fell to 229,000, a drop of 7,000 claims from the preceding week’s average of 236,000 claims.
The Administration’s latest report marked the 208th straight week that initial claims have come in below the 300,000-claim level, which economists consider an indicator of a growing job market.
We are still seeing some releases delayed due to the recent government shutdown. This week, we can expect:
- Monday – Construction spending for December from the Census Bureau and the Department of Housing and Urban Development.
- Tuesday – New home sales for December from the Census Bureau and the Department of Housing and Urban Development.
- Wednesday – The balance of trade for December from the Census Bureau.
- Thursday – Initial jobless claims for last week from the Employment and Training Administration; consumer credit for January from the Federal Reserve.
- Friday – Payrolls, unemployment rate, and hourly earnings for February from the Bureau of Labor Statistics; housing starts for January from the Census Bureau and the Department of Housing and Urban Development.