Housing Starts Fell Sharply in April

New homebuilding slowed notably in April, with the pace falling 16.5% from the previous month. The pace of new construction fell to 853,000 annual units, from over one million in March. Housing starts are now at their slowest pace since November of last year. Despite the deterioration, we have seen significant improvement in the past year.



April’s decline was driven primarily by multi-family construction, which fell 38.9% from the previous month. Single-family construction also slowed over the month, albeit by a much more modest 2.1%. Multi-family construction tends to be volatile, but has accounted for a large portion of the improvement over the past year.



Housing permits rose sharply in April, giving hope for a rebound in construction in March. Permit issuance rose 14.3%, driven primarily by multi-family permits, which rose 37.5%.

Read the Census report.

Consumer Prices Fell 0.4% in April

The consumer price index declined 0.4% in April due primarily to falling gasoline prices. Core prices rose at a weak 0.1% in April, matching the previous month’s pace. Consumer prices are now just 1.1% above year-ago levels, the weakest level since late 2010.



The energy index was entirely responsible for April’s decline, plunging 4.3% over the month. This decline is even sharper than the strong 2.6% decline seen the previous month. Seasonally adjusted gasoline prices dropped 8.1% over the month, more than offsetting modest increases in electricity and natural gas prices.

Core price appreciation remained weak, with prices rising just 0.1% for the second consecutive month. This is considerably slower than the 0.3% monthly increases seen at the beginning of the year. Prices for goods failed to appreciate in April, while prices on services rose just 0.1%.

Read the BLS report.

Homebuilder Sentiment Improved in May

According to the NAHB, homebuilder sentiment improved in May as the index rose to 44 and reversed a three month negative trend. The details of the report were good as well, with all three components of the report showing improvement from the previous month, particularly optimism in the next 6 months.

Out of the four housing market regions in the U.S., only the west declined from April. The Midwest showed the most improvement and grew to an index of 45.

Low interest rates continue to help the housing market.

Read the NAHB release.

Producer Prices Fell in April

Producer prices fell 0.7% in April. Aside from gains in January and February, prices have fallen since October. The decline was broad based, led by a 2.5% decline in finished energy goods. Producer prices are now 0.7% above year ago levels, the slowest reading in 9 months.



Core prices for finished goods grew at 0.1%, down from 0.2% the previous month. Food prices dropped 0.8%, reversing a positive reading last month.

The prices of crude goods fell 2.8% from the previous month and is 5.9% below year ago levels. Crude prices continue their declining trend.

Read the BLS release.

Small Business Optimism Rose in April

The NFIB’s Small Business Optimism Index rose 2.6 points in April, reaching 92.1. The index is still weak, only 1.4 points above the recovery average of 90.7 and well below the long run average of 98.1.



Financing continues to be the least citied challenge facing small business, with only 2% of respondents reporting it as their single most important problem, a 1% drop from the previous month. Taxes and government requirements remained unchanged as the first and second most often cited problems for small businesses at 23% and 21% respectively.

Competition from large business and quality of labor increased, while inflation and cost of labor decreased from March. Despite the increase in the index, small businesses continue to remain pessimistic about the economy and on net a negative 15% expected business conditions to improve in 6 months. The good news is that the figure is a 13% increase over March.

Read the NFIB report.

Retail Sales Increased 0.1% in April

Retail sales increased 0.1% in April, following a revised 0.5% decline the previous month. Retail sales continue their volatile trend, alternating between increasing and decreasing the past five months. Retail sales are now 3.7% above year ago levels, an improvement from March, but still well below year-ago growth seen in other previous months.



Excluding autos and gas, sales were up 0.6% from the previous month and 3.9% from year ago levels.

Gasoline continued to drag on retail sales, as gasoline stations saw a 4.7% drop in sales from March. Along with food and beverages, they were the only two categories with negative sale growth from the previous month. Building materials showed the strongest gains in April, increasing 1.5%.

Read the Census release.

Consumer Credit Growth Slowed in March

Consumer credit increased $8.0 billion in March, less then half of the $18.1 billion gain seen in February. Non-revolving credit continued to drive the gains in consumer credit, as revolving credit decreased. Growth slowed to 3.4%, after sharp increases the previous month.



Revolving credit shrank for the first time this year, dropping $1.7 billion, which was 2.4% decline from the previous month. Revolving credit continues the volatile trend seen in 2012. In the past year, revolving credit has grown by just $4.0 billion.



Non-revolving credit grew 6.5%, gaining $9.7 billion. Non-revolving credit, consisting primarily of auto and student loans, has been the primary driver of credit growth over the past two years, and has gained $154.6 billion in the past year. Student loans continue to account for the majority of this growth accounting for 80% of March’s increase on a non-seasonally adjusted basis.



The consumer credit report from January echoes the same trends witnessed in the last two years. Non-revolving consumer credit continues to swell while there is minimal revolving consumer credit change.

Read the Federal Reserve release.