NAM: Monday Economic Report

  • Manufacturing production declined 0.5 percent in September, falling for the sixth time year to date but following a gain of 0.6 percent in August. The latest decrease was led by a sharp decline in motor vehicles and parts production, down 4.2 percent, which was likely negatively impacted by the strike at General Motors. (A tentative deal was reached last week.) Excluding motor vehicles and parts, manufacturing production fell 0.2 percent in September.
  • Overall, the data also continue to reflect struggles in the manufacturing sector related to weaker global growth and trade uncertainties. Manufacturing production has fallen 0.9 percent over the past 12 months, for instance, declining on a year-over-year basis for the third consecutive month.
  • Total industrial production declined 0.4 percent in September, and on a year-over-year basis, it has inched down 0.1 percent over the past 12 months. It was the first negative year-over-year reading since November 2016.
  • The New York and Philadelphia Federal Reserve Banks both reported expanding manufacturing activity in their districts, albeit with modest growth. Respondents felt positive in their outlook for the next six months.
  • Housing starts fell 9.4 percent, down from an annualized 1,386,000 units in August to 1,256,000 units in September. Despite pulling back sharply from the best reading since June 2007, the single-family data continued to be encouraging. Single-family starts inched up from 915,000 units to 918,000 units, the strongest pace since January.
  • Meanwhile, housing permits fell 2.7 percent in the latest report, down from 1,425,000 units at the annual rate in August (the best since May 2007) to 1,387,000 units in September. With that said, single-family permits were the strongest since February 2018.
  • New residential construction permits have jumped 7.7 percent year-over-year, which should bode well for accelerated housing activity over the coming months. For their part, homebuilder optimism rose to a 20-month high in October. Indeed, would-be homebuyers appear to be motivated by mortgage rates that are near three-year lows.
  • Finally, retail sales fell 0.3 percent in September, which was disappointing, but it followed an upwardly revised gain of 0.6 percent in August. Excluding automotive and gasoline sales, retail spending was flat in September. Despite the weaker data in September, retail sales have risen a healthy 4.1 percent over the past 12 months, and overall, consumer spending has continued to be a bright spot in the economy over the past year.