ECONOMIC NUGGETS – November 1, 2012
Economic nuggets from the past two weeks/' news headlines and industry publications.
Here are some economic nuggets from the past two weeks’ news headlines and industry publications.
- Total commercial construction spending advanced 0.6% to $851.6 billion at a seasonally adjusted annual rate (SAAR) in September. Year-to-date not seasonally adjusted (NSA) spending rose 8.9% from the same period in 2011. Total spending for September incorporated the following:
- Nonresidential construction spending fell 1.4% to $294.4 billion, but was 6.4% higher on a year-to-date basis compared to a year ago
- Heavy engineering construction spending rose 0.7% to $265.0 billion and was up 8.6% year-to-date
- New residential construction spending shot up 3.3% to $165.3 billion and stood 16.1% higher year-to-date
- Third quarter real (inflation-adjusted) gross domestic product (GDP) grew 2.0% at a seasonally adjusted annual rate (SAAR). This was a bounce back from the second quarter’s 1.3% rate.
- The drought that blanketed much of the nation appears to have reduced second quarter growth by 0.2% and third quarter growth by 0.4%. The impact of the drought on the economy is temporary and will soon cease to be a negative.
- Investment in residential construction grew 14.4% (SAAR) in the third quarter, the sixth consecutive quarterly increase, and added 0.3% to real GDP growth. Meanwhile, investment in nonresidential structures fell 4.4%, ending five consecutive quarterly increases and subtracting 0.1% from its growth.
- Single-family housing starts increased a robust 11.0% in September to 603,000 (SAAR) from 543,000 in August. Single-family housing permits rose a solid 7.6% to 550,000 for the month, following no change in August. For the third quarter, single-family starts were up 6.7% and building permits were up 8.0%.
- New single-family home sales rebounded 5.7% in September to 389,000 (SAAR), after falling 1.3% the month before. September sales were at their highest level since April 2010 when a homebuyer tax credit stimulated sales.
- For the seventh consecutive month, the 10-city and 20-city July S&P/Case-Shiller® Home Price indexes were up. The 10-city index increased 0.4% on a seasonally adjusted (SA) basis and the 20-city index 0.5%. The 10-city index was up a solid 1.3% on a year-over-year (NSA) basis, and the 20-city index was up an even stronger 2.0%.
- The October NAHB/Wells Fargo Housing Market Index (HMI) inched up a point to 41, marking the sixth month in a row that the index was up. The October index is the highest it has been in over six years, a definite positive for the single-family construction market.
- The homeownership rate fell from 65.6% (SA) in the second quarter to 65.3% in the third quarter—the lowest the rate has been since first quarter 1996. Over the same two quarters this year, the NSA rental vacancy rate held steady at 8.6%. In the third quarter of 2011, the rental vacancy rate was over 1% higher: 9.8%.
- Multifamily housing starts surged 25.1% to 269,000 (SAAR) in September following a 3.2% decline from the previous month. The 3-month moving average, which smoothes out the erratic monthly moves, increased 7.0% to 235,000. Year-to-date (NSA) starts increased 34.6% over 2011.
- The 3-month moving average for September multifamily building permits rose 9.3% to 313,000 from August’s 286,000. Year-to-date (NSA) permits were up 45.2%.
- The AIA Billings Index rose for the fourth month in a row and for the second month in a row since March was above 50, advancing to 51.6 from 50.2 in August. An index number above 50 denotes higher billings.
- The September Producer Price Index (PPI) for finished goods increased 1.1% (SA) after jumping 1.7% in August. Both of the monthly increases were largely due to higher energy prices. The index was up 2.1% (NSA) on a year-over-year basis.
- An index that measures the prices of inputs used in nonresidential construction, which excludes capital equipment, was 1.2% higher on a not seasonally adjusted (NSA) basis in September after an almost as strong 1.0% increase in August. The index was up 1.6% from a year earlier.
- The third quarter Employment Cost Index (ECI) for total compensation rose a moderate 0.4% (SA). The rate of increase for benefit costs was more than double that for wages—0.8% vs. 0.3%. On a NSA year-over-year basis, the total ECI was up 2.0%.
- The September Consumer Price Index (CPI) advanced 0.6% for the second month in a row and increased 2.0% (NSA) from September 2011. For the third consecutive month, the core CPI (which excludes food and energy prices) rose a modest 0.1% and was 2.0% (NSA) higher than September 2011.
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