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By New_Deal_democrat April 18, 2017 10:40 am
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March housing and production: good news and bad news -- relatively
If you are looking for some good news or some bad news on the state of the economy, this morning we got a little of both -- on a relative basis.

First, the good news, at least relatively speaking.  In the very forward looking housing report, permits tied for their second best reading since the recession. Only December was higher: 

The even less volatile single family permits backed off last month's post-recession high, but only slightly.  In addition to February, only December's number was higher:


 

[UPDATE:  In the last few months I have also noted the 3 month moving average of housing starts as a way to smooth out the month over month jumps in that metric, which is twice as volatile as permits.  Here's what starts look like:]
 
 
The three month moving average of starts, at 1253, is  slightly below the peak one month ago of 1273, but is higher than any other 3 month period since the recession.  There's nothing here yet implying a change in trend.
 
While we didn't make new highs this month, the positive trend since the beginning of winter  looks intact. I have been expecting this series to stall out or even turn down slightly, due to the higher interest rates since the November election.  Since neither overall nor single family permits actually made new highs, that may still happen, but we will need a couple more months' worth of data to be more certain.

The relatively bad news was in industrial production.  Yes, the overall number was higher, in fact the highest in nearly two years: 

But once again it was utilities that caused the volatility.  In January and February, the warm winter meant utility production was down.  March was actually colder than February in the eastern half of the country, so utility production was up:

 
 
This is playing havoc with the seasonal adjustments.

When we turn to manufacturing and mining, which have been driving the recent advance, one (mining) stalled out, and the other (manufacturing) turned down significantly:

Bear in mind that, while industrial production tells us where we are now, housing permits tell us where we are likely to be in a year. Permits for the last 4 months have been higher than at any point since the recession, so I expect that the relative weakness in manufacturing industrial production is transitory and should improve as the year progresses.

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