Rover's Weekly Market Brief — 10/20/2017

Economy

Noting that the continued effects of Hurricanes Harvey and Irma held down September’s industrial production growth by 0.25%, September’s production nonetheless was up +0.3%, reversing declines in July (revised from +0.4% to -0.1%) and August (revised from -0.9% to -0.7%). Chemical industry output was strongly affected by Hurricane Harvey, showing a -7.2% decline, and helping to drag overall material production down -0.2%. Durable goods manufacturing increased +1.0%, but overall manufacturing output was held to +0.1% by a -0.9% drop in nondurables. Consumer goods production increased +0.5%, with increases for autos (+1.1%), electronics (+1.9%), and furniture (+1.4%), and decreases for clothing (-1.0%) and energy (-0.2%).

September housing starts were down -4.7% at a seasonally adjusted annual rate (SAAR) of 1.13 million, but were up +6.1% compared to September 2016. Starts were up in the West (+15.7%), but down in the Northeast (-9.2%), Midwest (-20.2%), and South (-9.3%). Permits were down -4.5% at a SAAR of 1.22 million, and were down -4.3% compared to September 2016. The drop in permits is largely due to drops for multiple unit dwellings while single family home permits increased: single family permits were up +2.4% (+9.3% Y/Y), 2-4 units were flat (-7.7% Y/Y), and 5 or more units were down -17.4% (-25.3% Y/Y). Single family construction permits decreased in the South (-0.9%, 425,000 SAAR), but increased in the West (+1.0%, 201,000), Midwest (+7.9%, 123,000), and Northeast (+20.7%, 70,000).

The Existing Homes Sales report from the National Association of Realtors (NAR) showed a slight increase of +0.7% in sales after three months of declines, and attributed a decline in annual sales to ongoing supply shortages, especially for lower priced homes, and hurricane activity. Housing inventory rose +1.6%, but is -6.4% lower than September 2016, and has fallen for 28 consecutive months. The median home price was $245,100, up 4.2% from September 2016, and the 67th straight month of yearly increases. Compared to September 2016, the percentage of first time home buyers dropped from 34% to 29%, and matches the lowest share since September 2015. The SAAR of sales by region had 2.13 million sales in the South (-2.3% Y/Y), 1.3 million sales in the Midwest (+1.6% Y/Y), 1.24 million sales in the West (+3.3% Y/Y), and 720,000 sales in the Northeast (-1.4% Y/Y).

Upcoming Economic Reports:

Wednesday October 25 – Durable Goods Orders

Friday October 27 – GDP

Earnings Calendar:

 

Monday	Tuesday	Wednesday	Thursday	Friday
Illinois Tool Works (ITW)	AT&T (T)	Visa (V)	Alphabet (GOOGL)	Exxon Mobil (XOM)
T-Mobile US (TMUS)	Novartis (NVS)	Coca-Cola (KO)	Microsoft (MSFT)	Industrial & Commercial Bank (IDCBY)