Housing starts (millions)
MACROECONOMICS & END MARKETS
Macro indicators running tab: 12 of 20
Number of new unemployment insurance claims fell from 2,000 to 184,000 in the week ending April 16. Continuing claims fell from 58,000 to 1.4 million, the lowest level in more than fifty years. The Iinsured unemployment rate for the week ending April 9 was down 0.1% to 1.0%.
Sales of existing houses fell for the second month in a row, a loss of 2.7% to an annual rate of 5.77 million in March, reflecting higher mortgage rates and rising inflation. The 30-year fixed mortgage rate topped 5% for the first time since 2011, increasing monthly payments and hurting affordability. Compared to a year ago, sales were down 4.5%. The inventory of unsold homes at the end of the month has increased and represents a supply of 2.0 months at the current rate of sales. That’s more than last month and less than a year ago. The median selling price increased 15.0% year-on-year.
Despite rising mortgage rates and rising prices for lumber and other building materials, demand for housing remains strong. Housing starts edged up 0.3% to an annual pace of 1.79 million in March, the fastest pace since mid-2006. Single-family home starts, however, fell 1.7% to a rate of 1.2 million. avant-garde building permit edged up 0.4% to a pace of 1.87 million. Compared to a year ago, housing starts rose 3.9% year-over-year, while building permits rose 6.7% year-over-year.
Home builder feeling fell to a seven-month low in April as rising mortgage rates exacerbated the impact of rising building materials inflation and rising labor costs. Down 2 points to 77, the NAHB/Wells Fargo housing market index fell for a fourth month. Like the ISM Purchasing Managers Index, a reading above 50 indicates expansion; this month’s falling reading suggests the housing market has been growing at a slower pace as current selling conditions and buyer traffic have eased, while selling expectations over the next six months accelerated.
Despite the headwinds associated with Russia’s invasion of Ukraine, the Index of Leading Economic Index® (LEI) rose 0.3% in March, following an upwardly revised gain of 0.6% in February. The Conference Board notes that “this broad-based improvement indicates that economic growth is expected to continue through 2022 despite volatile stock prices and weakening business and consumer expectations.”
ACC SURVEY OF ECONOMIC FORECASTS – USA
• The outlook for 2022 has weakened slightly compared to March with continued inflationary pressures, exacerbated by the Russian invasion of Ukraine, and subsequent monetary tightening.
• Expectations through 2023 remain broadly stable compared to March but were lower compared to the start of the year.
• US GDP is expected to grow by 3.2% in 2022, with the highest inflation in decades eroding growth prospects. In 2023, forecasters continue to expect growth of 2.3% in the United States, close to its long-term trend.
• With significantly higher inflation and the removal of fiscal stimulus, consumer spending is expected to rise 3.1% in 2022 (from a 7.9% rise in 2021) before slowing further to a gain of 2.0% in 2023.
• Business fixed investment is expected to increase by 5.5% in 2022 and 4.2% in 2023.
• Industrial production is expected to grow 4.6% in 2022 (above last month’s expectations as oil and gas activity picks up) and 2.2% in 2023.
• With continued supply chain challenges for automakers, the light vehicle sales forecast has been lowered again to 15.3 million in 2022 and 16.7 million in 2023.
• Expectations for housing starts have increased slightly to 1.66 million in 2022 and 1.60 million in 2023.
• The unemployment rate is expected to average 3.6% in 2022 and 3.7% in 2023.
• Inflation continues to accelerate, first due to tight supply chains and labor shortages, and now due to the impact of the Russian invasion on commodity markets. base. Expectations for consumer price inflation were again significantly higher compared to last month, with forecasters expecting inflation to rise to 6.9% in 2022, before slowing to 3.0% in 2023, as that the constraints are relaxed.
• Compared to last month, interest rate expectations (10-year cash) have continued to rise for 2022 and 2023.
Oil prices fell following downward revisions to the IMF’s projections for global economic growth this year. Natural gas prices rose above $7 earlier in the week, but ended at the same level as last Thursday on a larger than expected inventory build of 53 BCF at the end of last week. The combined number of oil and gas rigs continued to increase, up 3 to 691 rigs.
For the chemicals business, the indicators still evoke a green banner for basic and specialty chemicals.
According to data published by the Association of American Railroads, chemical car loads were down 2,062 (5.9%) for the week ending April 16. Loadings increased by 10.4% Y/Y (13 week MA), 8.6% YTD/YTD and have increased for 9 of the last 13 weeks.
the United States Regional Chemical Production Index (US CPRI) was 0.3% higher in March after a similar gain in February and a 0.2% decline in January, according to the ACC. Chemical production increased in all regions, with the largest gains being recorded on the Gulf Coast. The US CPRI is measured as a three-month moving average (3MMA). Compared to March 2021, U.S. chemical production was ahead 8.7%, an improving comparison from last month and reflecting heavy production losses in 2021 due to winter storm Uri. Production of chemicals remained higher than a year ago in all regions.
Chemical production was mixed in March (3MMA), with an improving trend in the production of coatings, adhesives, industrial gases, organic chemicals, synthetic rubber, manufactured fibers, plastic resins and basic inorganic chemicals. These gains were offset by the low production of fertilizers and phytosanitary products. Production of other specialty chemicals remained stable.
As almost all manufactured goods are produced using chemistry in one form or another, manufacturing activity is an important indicator of demand for chemicals. Manufacturing production increased for a seventh consecutive month in March, by 0.3% (3MMA). The 3MMA trend in manufacturing output was mixed, with gains in output from foundries, semiconductors, refining, computers and electronics, oil and gas extraction, printing , furniture, plastic products, structural panels, building materials, fabricated metal products, paper, aerospace, appliances, food and beverage, and apparel.
Note on color codes
The colors of the banner represent observations on current global economic conditions and business chemistry. For the overall economy, we keep a running tab of 20 indicators. The color of the macroeconomic section banner is determined as follows:
Green – 13 or more positives
Yellow – between 8 and 12 positive
Red – 7 positives or less
For the chemical industry, there are fewer indicators available. Accordingly, we rely on our judgment as to whether production in industry (defined as chemicals excluding pharmaceuticals) has increased or decreased for three consecutive months.
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