Last Week’s Economic News in Review September 23, 2020

September 23, 2020

Housing starts declined, and retail sales growth continued, but at a slower rate. Meanwhile, layoffs declined.

 

Housing Starts

Starts on the construction of private housing fell to an annual rate of 1,416,000 in August, which was 5.1 percent below July’s pace of 1,492,000, according to last week’s joint report from the Census Bureau and Department of Housing and Urban Development.

That said, when compared to the same period a year ago, August’s housing starts were 4.1 percent higher than August 2019’s pace of 1,377,000.

The big cause of the drop in housing starts was due to starts on buildings with five or more units, which tumbled to an annual rate of 375,000, which was 24.4 percent below July’s rate of 503,000. Conversely, starts on single-family homes rose to an annual rate of 1,021,000, which was 4.1 percent higher than July’s rate of 981,000.

Meanwhile, building permits for the construction of private housing issued in August ticked down to an annual rate of 1,470,000, which was 0.9 percent below July’s rate of 1,483,000.

Permits for single-family home construction in August rose to an annual rate of 1,036,000, which was 6 percent higher than July’s pace of 977,000. Once again, multi-family dwellings for the cause for the drop, with permits for units with buildings of five units or more falling to a rate of 381,000 in August, which was 17.4 percent down from July’s rate of 461,000.

 

Retail Sales

Despite high unemployment, retail sales rose to $537.5 billion in August, which marked a 0.6 percent increase over July, and, when compared to the same period a year ago, was 2.6 percent higher than August 2019.

Key growth sectors included sales at food and drinking establishments, which rose 4.7 percent; closing stores, which gained 2.9 percent; furniture and home furnishings stores, which grew 2.1 percent; and building material and garden supply stores, which increased 2 percent.

August’s gain marked the fourth consecutive month of retail sales increases. This was likely due to the last remaining injection of federal stimulus checks and the reopening of various businesses, such as restaurants.

However, the pace of retail sales growth has been slowing, and with the expiration of the $600 supplemental unemployment insurance, economists aren’t so sure sales can continue growing.

“I think it will be much more difficult to see these gains going forward given that unemployment benefits have expired,” PNC Financial Services Group economist Gus Faucher told the New York Times.

 

Initial Jobless Claims

Turning to employment news, layoffs declined. Initial jobless claims filed by recently unemployed Americans during the week ending September 12 dropped to 860,000, a decrease of 33,000 claims from the previous week’s 893,000 claims, the Employment and Training Administration reported last week.

The four-week moving average, which is considered a more stable measure of jobless claims, fell to 912,000, which was 61,000 claims below the preceding week’s average of 973,000 claims.

Claims are approximately four times what they were before March when COVID-19 caused an economic shutdown. While layoffs have slowed from even higher levels, there appears to be some leveling out at this currently high level, and that is worrying economists.

“I’m concerned about a plateau,” Oxford Economics Chief U.S. Economist Gregory Daco told the New York Times. “It suggests we are entering the second phase of the recovery, one that is slower and more susceptible to downside risk.”

 

This week, we can expect:

• Tuesday – Existing home sales for August from the National Association of Realtors.
• Thursday – Initial jobless claims for last week from the Employment and Training Administration; new home sales for August from the Census Bureau and Department of Housing and Urban Development.
• Friday – Durable goods order for August from the Census Bureau.

 

Please drop me an email or call if you have any questions – or someone you know is in need of expert advice. I love to help those you care about. If you have a referral please click the button down below. Your referrals are the heart and lifeblood of my business.

 

CLICK HERE

 

Omar Khamisa
Owner
Mission San Jose Mortgage
2111 W. March Lane, Suite B100
Stockton, CA 95207
Office: 209-651-2000
Mobile: 510-648-5535
Fax: 209-434-2311
NMLS: 369325
Omar@MSJMortgage.com