Good News for Home Building in Disappointing Construction Spending Data

Data on construction spending was worse than economists exp꧒ected, but the figures could hold some good news for the housing market.

Construction spending in February was $2.09 trillion, dropping 0.3% in February. That's well below the 0.7% increase that economists surveyed by the Wall Street Journal and Dow Jones Newswires projected.

Public construction spending dropped 1.2% from January, while private construction spending in February was vꦯirtually unchanged from the prior month, according to the Census Bureau data.

However, investment in private residential construction accelerated. If this pace is sustained throughout the year, it would be the biggest contribution that private homebuilding spending has made to U.S. gross domestic product (GDP) in the past three years, accord🍒ing to estimates by economists at Oxford E☂conomics. 

Marke𒅌t watchers have𒀰 been eagerly awaiting signs of increases in home construction spending.

With 澳洲幸运5官方开奖结果体彩网:limited inventory and few sellers, home prices have remained high, 澳洲幸运5官方开奖结果体彩网:helping keep inflation elevated and 澳洲幸运5官方开奖结果体彩网:home ownership out of reach for many in the market. 

-Terry Lane

Manufacturing Orders Move Higher, But So Do Prices

A pair of manufacturing executive surveys showed new orders are coming in and production is expanding, but prices are🎀 movi✱ng higher too, potentially complicating the inflation outlook.

For the first time since September 2022, the 澳洲幸运5官方开奖结果体彩网:Institute of Supply Management Manufacturing Index indicated an expanding sector. The index moved higher by 2.5 percentage points from last month to 50.3% in March. Economists polled by the Dow Jones Newswires and Wall Street Journal on average projected the index would be below 50%, which indicates economic contraction.

“The increase in ord♊ers points to firming demand for manufactured goods and suggests inventories are more aligned with sales,” BMO Capital Markets Senior Economist Jay Hawkins wrote.

The 澳洲幸运5官方开奖结果体彩网:ISM manufacturing survey showed both new orders and productio🥀n moved back into expansion territ𝐆ory in March after dipping in February. 

“Demand remains at the early stages of recovery, with clear signs of🧜 improving conditions,” said Tim🎶othy Fiore, chair of the ISM manufacturing survey committee.  

Despite the S&P Global U.S. Manufacturing 澳洲幸运5官方开奖结果体彩网:Purchasing Managers Index (PMI) index dropping to 51.9 in March, the survey also showed continued improvements in business conditions.

An upturn in demand drove the fastes𒅌t increase in factory production since May 2022, said Chris Williamson, chief business economist at S&P Global Market Intelligence.

Firms are hiring more workers, but they’re also charging mor꧂e, Williamson said.

“Most notable was an especially steep rise in prices charged for consumer goods, which rose at a pace not seen for 16 months, underscoring the likely bumpy path in bringing inflation down to the Fed's 2% target,” Williamson said. 

The ISM sur꧅vey showed a similar rise in its price index, surging more than three percentage points to 55.8%, the third straight month pric꧃e increases have accelerated.

“The o🦋ne blemish in the report was rising 🌼input prices,” Hawkins wrote.

On Wednesday, the two firms will release similar survey data on th꧅e services sector. 

-Terry Lane

Pandemic Slowed Growth in East Asia and Pacific But Region Still Leads World

Developing East Asia and the Pacific is growing faster than the rest of the world ꦆbut slower than before the pandemic, according to the World Bank’s latest report.

Growth in the region, excluding China, is projected to tick up to 4.6% from 4.4% in 2023, but down from 4.9% on average in 2015-19, the 澳洲幸运5官方开奖结果体彩网:World Bank said in its new report, Firm Foundations of Growth.

Growth in China is projected to moderate to 4.5% this year from 5.2% in 2023 because of near-term problems, among them high debt and a weak real estate sector, as well as long-term challenges such as the country's aging demographics and geopolitical trade frictions, the World Bank said.

The report said that many countries in the region dep꧟end on external demand to grow exports—especially to China.

“China’s importance as the ultimate desti♍nation for domestic value-added in the region has significantly increased since the early 2000s,” the report said.

Read more about the report here.

-Fatima Attarwala

Consumers Are Still Spending—Potentially Stalling Rate Cuts

Friday’s report on Personal Consumption Expenditures from the Bureau of Economic Analysis highlighted one big obstacle in the Federal Reserve’s efforts to get inflation under control: consumers seemingly keep spending no matter what.

Consumer spending jumped 0.8% in February, a slowdown from the 1% increase the month before but still the second-largest percentage increase in a single month since January 2023.

The Federal Reserve’s anti-inflation interest rate hikes haven’t stopped people from spending—despite making borrowing much more costly for credit cards, mortgages and other kinds of consumer debt, 澳洲幸运5官方开奖结果体彩网:hurting household budgets.

High interest rates are meant to stifle inflation at the risk of slowing the economy and sending it into a recession. Instead, the 澳洲幸运5官方开奖结果体彩网:economy is staying resilient, largely due to continued consumer spending. The trouble is, that surging spending also could help keep inflation running hot.

After all, why would companies stop raising prices when customers keep on buying?

Economists have outlined a possible scenario where inflation stays just a bit🍬 too high for ♉the Fed’s liking, prompting the Fed to keep interest rates at a 23-year high for longer instead of cutting them 澳洲幸运5官方开奖结果体彩网:as they currently plan. Surging consumer spending in February is part of the equation that could make that happen.

“The days are getting longer and so is the wait for the Fed to lower interest rates,” Tim Quinlan and Shannon Seery Grein, economists at Wells Fargo Securities, wrote in a commentary. “That is partly because consumer outlays have not been slowed by higher borrowing costs as evidenced by the 0.8% increase in nominal spending in February.” 

Correction: This blog post has been corrected to refer to the likely next steps by the Federal Reserve—rate cuts.