July’s industrial production and new home construction

The most widely watched economic reports that were released last week were the July report on Industrial Production and Capacity Utilization from the Fed and the July report on New Residential Construction from the Census Bureau….in addition, on Friday the Bureau of Labor Statistics released the Regional and State Employment and Unemployment Report for July, a report which breaks down the two employment surveys from the monthly national jobs report by state and region….while the text of this report provides a useful summary of this data, the serious statistics aggregation can be found in the tables linked at the end of the report, where one can find the civilian labor force data and the change in payrolls by sector for each of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands…

The week also saw the release of the first two Fed regional manufacturing reports for August: the Empire State Manufacturing Survey from the New York Fed, which covers New York state, southwestern Connecticut, and northern New Jersey, reported their headline general business conditions index rose from +5.7 in June and from+15.6 in July to +20.6 in August, its highest reading in more than four years, and indicating that a majority of Second District manufacturers were reporting improving business conditions in August, about 15% more than the small plurality that reported improving business conditions just two months earlier, while the Philadelphia Fed Manufacturing Survey for August, covering most of Pennsylvania, southern New Jersey, and Delaware, reported their broadest diffusion index of manufacturing conditions rose to a five-year high of +47.4 in August from +41.4 in July, as “56.9% of the respondents reported an increase in general business activity, and 9.6% reported a decrease from July to August, while 29 percent reported no change”…

Industrial Production Rose 0.2% in July after June Production Revised 0.2% Higher

The Fed’s G17 release on Industrial production and Capacity Utilization for July indicated that industrial production rose 0.2%, after rising by a revised 0.3% in June, but after being revised to unchanged in May, and is now up 1.1% from a year ago….the industrial production index, with the benchmark now set for average 2017 production to equal to 100.0, rose to 103.0 in July from 102.8 in June, which was revised from the 102.6 reported for June a month ago…at the same time, the May reading for the IP index was revised from 102.6 to 102.5, the April reading for the index was revised from 102.4 to 102.5, and the March reading for the index was revised from 101.6 to 101.8…

The manufacturing index, which accounts for around 77% of the total IP index, rose 0.2% to 98.4 in July, after the June manufacturing index was revised from 97.9 to 98.3, and after the May manufacturing index was revised but unchanged at 98.0, the April manufacturing index was revised from the 97.8 published last month to 98.0, and the March index was revised from 97.1 to 97.3, all of which left the manufacturing index up 1.2% from a year ago….meanwhile, the mining index, which includes oil and gas well drilling, rose by 0.2% to 122.4 in July, after the June index was revised up from 124.2 to 122.2, which left mining 1.0% higher than it was a year ago, …finally, the seasonally adjusted utility index, which often fluctuates due to above or below normal temperatures, rose 0.5% to 110.7 in our hot July, after the June utility index was revised from 109.6 to 110.2, leaving the utility index 0.7% above its year ago reading of 109.9, when July’s temperature averages were also above normal…(NB: i don’t see an explanation for the sharp revisions to the June mining and utility indices, which virtually reversed the large revisions we saw a month ago…it’s possible there was a problem with last month’s data)

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 76.2% in June to 76.3% in July, after capacity utilization for June was revised up from the 76.1% reported a month ago…capacity utilization for NAICS durable goods production facilities rose from 75.8% in June to 76.2% in July, while capacity utilization for non-durables producers fell from 76.0% to 75.6% at the same time….meanwhile, capacity utilization for the mining sector was at 86.1% in July, after June’s utilization was revised down from 87.4% to 86.0%….meanwhile. utilities were operating at 70.0% of capacity during July, up from their 69.8% of capacity during June, a figure that was originally reported at 69.5%….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…

Housing Starts Reported 13.5% Lower in July; Building Permits Up 5.0%

The July report on New Residential Construction (pdf) from the Census Bureau estimated that new housing units were being started at a seasonally adjusted annual rate of 1,239,000 in July, which was “12.4 percent (±9.5 percent) below” the revised June housing start rate of 1,374,000, and was and was “13.5 percent (±11.0 percent) below” last July’s annual pace of 1,432,000 housing starts…..the figures in parenthesis indicate the most likely range of the change indicated; in other words, July’s housing starts could have been down by 2.9% or down by as much as 21.9% from those of June, with even larger revisions eventually possible…with this report, the annual rate for June housing starts was revised from the 1,427,000 reported last month to 1,415,000, while May starts, which were first reported at a 1,177,000 unit annual rate, were revised from last month’s initial revised figure of 1,199,000 annually to an annual rate of 1,182,000 with this report….

Those annual rates of housing starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by Census field agents, from which they estimated that 111,200 housing units were started in July, down from the 133,500 units started in June, but up from the 107,800 housing starts estimated in May….of those housing units started in July, an estimated 72,800 were single family homes and 37,600 were units in structures with more than 5 units, down from the revised 86,300 single family starts in June, and down from the 45,500 units started in structures with more than 5 units in June…

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 sharply revised housing starts data….in July, Census estimated new building permits were being issued for a seasonally adjusted annual rate of 1,443,000 housing units, which was 5.0 percent above the revised June annual rate of 1,374,000 permits, and was 3.1 percent above the rate of building permit issuance in July a year earlier…the annual rate for housing permits issued in June was revised from 1,367,000 to 1,374,000….

Again, these annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected by canvassing census agents, which showed permits for 129,900 housing units were issued in July, down from the revised estimate of 130,500 new permits issued in June…the July permits included 80,500 permits for single family homes, down from 83,800 single family permits in June, and 44,100 permits for housing units in apartment buildings with 5 or more units, up from 41,900 such multifamily permits a month earlier…

(the above is the synopsis that accompanied my regular Sunday morning news 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 of which are chosen from the aforementioned GGO posts, contact me…)