Global Macro Monitor

Econoday reports,

Housing on “slow mend” despite -4.8% headline number

No one number explains the housing starts report today. The headline was down but there were upward revisions and permits were up in May. And starts weakness was in the volatile multifamily component. Housing starts declined in May by 4.8 percent after rebounding 5.4 percent in April. The May pace of 0.708 million units fell short of market expectations for 0.720 million and is up 28.5 percent on a year-ago basis. April was revised up to 0.744 million from 0.717 million. For the latest month the single-family component gained 3.2 percent after a 4.0 percent rise in April. The multifamily component-which is volatile-fell 21.3 percent, following an 8.4 percent boost in April.

By region, the fall in starts reflected a 20.3 percent decrease in the Northeast with the Midwest declining 13.3 percent and the South falling 6.1 percent. The West rose 2.6 percent.

Housing permits showed notable improvement in May, suggesting growth in construction in coming months. Permits rebounded 7.9 percent, following a decline of 6.0 percent in April. The May rate of 0.780 million units posted higher than analysts’ estimate of 0.736 million units. Both single-family and multifamily components rose in May.

Despite the dip in the May headline number for starts, housing appears to be muddling upward but hardly at a robust pace. But until demand is notably stronger, modest growth in construction is good so as to prevent unwanted inventory.

There was little reaction in equity futures on release. However, today’s report could have some impact on the Fed’s decision tomorrow. The economy has been described by many as sluggish but taking into account all of the details today, housing may be considered to be on a slow mend and could help limit the size of any Fed action. For policy discussion, permits may stand out more than starts.

ICSC-Goldman Store Sales remains “soft”

Growth in chain-store sales remains soft, according to ICSC-Goldman’s same-store sales index which is unchanged in the June 16 week. The year-on-year rate of plus 3.6 percent is the highest since mid-May but the four-week average is unchanged at 3.1 percent which is a 3-month low. The report blames economic uncertainty both here and also globally for the softness. But it also notes that moderating gas prices should, in the coming weeks, begin to boost discretionary spending. Redbook, whose rates have been slightly below those of ICSC-Goldman, will be posted later this morning at 8:55 a.m. ET.

Redbook same store sales “soft,” up 0.4% on week

Sales at chain stores improved in the June 16 week but not as much as expected by Redbook whose same-store index shows a plus 2.4 percent rate, very soft but up 4 tenths from the prior week. The report notes activity tied in the week to Father’s Day and that warmer weather across much of the country helped move seasonal goods. June is still in progress and there’s hope that sales will pick up, reflected in Redbook’s monthly forecast which, at plus 0.5 percent, still calls for a sizable gain.

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