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Partners for Strategic Transactions

Housing Starts Up, Permits Down in May

6/27/2018

 
​Last week’s economic news was largely mixed, as home building saw strength in starts but weakness in permits, while the manufacturing sector showed signs of slowing (but still expanding) in purchasing activity, and manufacturing services saw continued growth in activity.
  • US homebuilding reached an 11-year high due to an acceleration in both single-family and multi-family home construction. According to data from the Commerce Department, housing starts jumped 5% in May to a seasonally adjusted annual rate of 1.35 million units. The figure – the highest since July 2007 – beat expectations of 1.31 million units.

  • In the same report from the Commerce Department, building permits were noted to fall 4.6% to a seasonally adjusted annual rate of 1.301 million units, or the lowest level since September 2017. Economists had expected permits to come in at 1.35 million units. The second straight monthly fall in building permits suggests moderation in housing activity. In fact, many small homebuilders are delaying projects on the belief that lumber prices will ease.

  • The U.S. Manufacturing Purchasing Managers Index (PMI) for June was released Friday with a reading of 54.6. Forecasts estimated a 56.3 reading. The PMI measures the activity level of purchasing managers in the manufacturing sector. A reading above 50 indicates expansion, while a reading below 50 indicates contraction. The index is closely watched because purchasing managers have earlier access to more robust investment data from their firms, so the reading can be a forward-looking indicator of overall economic performance. Friday’s reading of 54.6 is down from consensus analyst forecasts and is down from the previous reading of 56.4. Purchasing managers activity may have slowed due to recent tariffs put in place at the start of the month. The increased cost of the raw materials could make a number of input goods costlier for firms, thereby reducing their desire to purchase.
​
  • PMI data for services was also released on Friday. The Services reading was 56.5, a higher activity level than managers in the manufacturing sector. Service companies do not have the same requirement for industrial materials in their supply chains as manufacturing firms. Therefore, service companies’ demands are less inhibited by tariffs on industrial materials.

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​Skyline Advisors is a division of Ideation Ventures, Inc. Services involving securities are offered through M&A Securities Group, Inc.4151 N Mulberry Drive Suite 252, Kansas City, MO, 64116  (“MAS") . Services involving real estate brokerage are offered through Berkshire Hathaway HomeServices Ambassador Real Estate ("BHHS"). Skyline, MAS, and BHHS are separate entities. 
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