Wednesday, June 17, 2020
New Housing Starts for the month of May have come out this morning ahead of the opening bell, but results were disappointing: 974K new starts for the month was off the pace of 1.1 million seasonally adjusted, annualized units expected, though the upward April revision to 934K added a bit more to the moving average. This amounts to a monthly gain in starts of 4.3%, whereas +22.3% was estimated.
Building Permits, also for May, performed better at 1.22 million, though down a tad from the 1.25 million analysts had been looking for. Revisions for April were modestly downward to 1.066 million. But this brings about 14.4% growth as opposed to 1.8%. Building Permits, of course, are a forward indicator of future Housing Starts.
While it might be hard to see in the month-over-month headline numbers, the disappointment on starts comes from what had been perceived as excessive pent-up demand, especially single-family housing, which had already been in short supply. Single-family starts rose just 0.1% from April, and are still down 18% year over year.
This may all be an issue of preparedness on the development side — labor, which had been shed in March and April for many companies in the industry, as well as manufacture and transportation of building supplies — likely played somewhat of a part in the lag of new starts last month. We will look to see if we get a pop in June figures next month, once supply and workers have come back online.
Flights Canceled in Beijing
Overnight, Beijing has announced it has canceled 60% of its flights out of China’s capital Wednesday, in order to thwart what is being perceived as a second wave of COVID-19 in the city. This follows school closings announced earlier this week in Beijing. Beijing has two major airports; Beijing Capital has been considered the second-busiest in the world.
Powell Finishes Report to Congress
Fed Chair Jerome “Jay” Powell concludes his congressional testimony today, following his continued expressed concerns for U.S. economic recovery yesterday. Powell did not appear to be notably moved by fresh data like the record-high 17.7% growth in Retail Sales Tuesday; rather, he continues to believe there will be lasting damage that would seem to discount a “V-shaped recovery.”
Powell continued to stress high unemployment numbers, and seemed to be implying more action will be forthcoming — either via the Federal Reserve or perhaps in another law passed by Congress — to address long-term unemployment, which “will need support.” But the Fed Chair’s testimony did not have a lasting negative impact on the market the way it was perceived to have done last Thursday.
Context for Economic Figures
The good news is that we seem to have rebounded — and strongly — from the depths of the pandemic crisis on economic terms. This goes not only for Retail Sales but employment figures, as well. Even though we expect the May revision to non-farm payrolls in a couple weeks swing back to a negative number, the worst does indeed seem to be behind us.
But just because you’ve dug yourself 33% out of a hole doesn’t mean you’re back on solid ground yet; in fact, there’s plenty more work to be done, and much of it will likely be more strenuous to achieve. The re-hirings and sales numbers may look terrific month over month, delivering terrific rates of change in the short term, but those were the low-hanging fruit gathered up by a rebounding economy. Keep in mind we are still way down from a year ago, and even year to date.
Mark Vickery
Senior Editor
Questions or comments about this article and/or its author? Click here>>
Zacks Responds to Pot Stock "Gold Rush"
With almost unimaginable profit potential, legalized marijuana is skyrocketing from $9 billion in 2017 to an expected $32 billion in 2020 to a possible $146 billion by 2025. Not since the Repeal of Prohibition has there been such a release of pent-up demand.
See Zacks’ recommended buys >>
Image: Bigstock
Housing Starts' Sluggish Rebound, Powell Concludes Today
Wednesday, June 17, 2020
New Housing Starts for the month of May have come out this morning ahead of the opening bell, but results were disappointing: 974K new starts for the month was off the pace of 1.1 million seasonally adjusted, annualized units expected, though the upward April revision to 934K added a bit more to the moving average. This amounts to a monthly gain in starts of 4.3%, whereas +22.3% was estimated.
Building Permits, also for May, performed better at 1.22 million, though down a tad from the 1.25 million analysts had been looking for. Revisions for April were modestly downward to 1.066 million. But this brings about 14.4% growth as opposed to 1.8%. Building Permits, of course, are a forward indicator of future Housing Starts.
While it might be hard to see in the month-over-month headline numbers, the disappointment on starts comes from what had been perceived as excessive pent-up demand, especially single-family housing, which had already been in short supply. Single-family starts rose just 0.1% from April, and are still down 18% year over year.
This may all be an issue of preparedness on the development side — labor, which had been shed in March and April for many companies in the industry, as well as manufacture and transportation of building supplies — likely played somewhat of a part in the lag of new starts last month. We will look to see if we get a pop in June figures next month, once supply and workers have come back online.
Flights Canceled in Beijing
Overnight, Beijing has announced it has canceled 60% of its flights out of China’s capital Wednesday, in order to thwart what is being perceived as a second wave of COVID-19 in the city. This follows school closings announced earlier this week in Beijing. Beijing has two major airports; Beijing Capital has been considered the second-busiest in the world.
Powell Finishes Report to Congress
Fed Chair Jerome “Jay” Powell concludes his congressional testimony today, following his continued expressed concerns for U.S. economic recovery yesterday. Powell did not appear to be notably moved by fresh data like the record-high 17.7% growth in Retail Sales Tuesday; rather, he continues to believe there will be lasting damage that would seem to discount a “V-shaped recovery.”
Powell continued to stress high unemployment numbers, and seemed to be implying more action will be forthcoming — either via the Federal Reserve or perhaps in another law passed by Congress — to address long-term unemployment, which “will need support.” But the Fed Chair’s testimony did not have a lasting negative impact on the market the way it was perceived to have done last Thursday.
Context for Economic Figures
The good news is that we seem to have rebounded — and strongly — from the depths of the pandemic crisis on economic terms. This goes not only for Retail Sales but employment figures, as well. Even though we expect the May revision to non-farm payrolls in a couple weeks swing back to a negative number, the worst does indeed seem to be behind us.
But just because you’ve dug yourself 33% out of a hole doesn’t mean you’re back on solid ground yet; in fact, there’s plenty more work to be done, and much of it will likely be more strenuous to achieve. The re-hirings and sales numbers may look terrific month over month, delivering terrific rates of change in the short term, but those were the low-hanging fruit gathered up by a rebounding economy. Keep in mind we are still way down from a year ago, and even year to date.
Mark Vickery
Senior Editor
Questions or comments about this article and/or its author? Click here>>
Zacks Responds to Pot Stock "Gold Rush"
With almost unimaginable profit potential, legalized marijuana is skyrocketing from $9 billion in 2017 to an expected $32 billion in 2020 to a possible $146 billion by 2025. Not since the Repeal of Prohibition has there been such a release of pent-up demand.
See Zacks’ recommended buys >>