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Housing Starts Fall, While Producer Prices Decline

August 18th, 2009 Michael McDonough

Housing starts fell to 0.581 in July compared to 0.587mn. This number was slightly below the market consensus. The 1% drop in starts comes after a 10% increase in July.  Single family starts actually rose 1.7%, but this was more than offset by a 13% decline in multi-family starts.  Starts fell 16% in the Northeast, 2% in the West and 1% in the South, while increasing 13% in the Midwest. Despite starts being on an uptrend, over the past couple months, it is important to remember that this index remains well below its historical average and is indicative of a weak housing market.  Nevertheless, most indicators continue pointing towards a bottom in the housing market, including yesterday’s home builder’s index.  Foreclosures, high inventories, and a weak labor market continue to act as the sector’s Achilles heel.

PPI fell more than anticipated in July at -0.9% on the back of lower energy prices combined with an a unexpected drop in food prices.  Core-PPI fell -0.1%.  The drop in Core-PPI was well rounded across many goods.  On a year over year basis headline PPI has fallen a record 6.8%, while Core-PPI is up 2.6%.

Group PPI (MoM)
Finished goods -0.9%
Finished consumer goods -1.1%
Finished consumer foods -1.5%
Crude -7.4%
Processed -0.9%
Finished consumer goods, excluding foods -0.9%
Nondurable goods less foods -1.0%
Durable goods -0.5%
Capital equipment -0.2%
Manufacturing industries 0.0%
Nonmanufacturing industries -0.3%
Intermediate materials, supplies, and components -0.2%
Materials and components for manufacturing 0.4%
Materials for food manufacturing -1.8%
Materials for nondurable manufacturing 1.4%
Materials for durable manufacturing 0.6%
Components for manufacturing 0.0%
Materials and components for construction -0.3%
Processed fuels and lubricants -1.6%
Manufacturing industries -1.1%
Nonmanufacturing industries -1.8%
Containers -0.4%
Supplies -0.3%
Manufacturing industries 0.5%
Nonmanufacturing industries -0.5%
Feeds -3.8%
Other supplies -0.2%
Crude materials for further processing -4.5%
Foodstuffs and feedstuffs -6.1%
Nonfood materials -3.4%
Nonfood materials except fuel -6.6%
Manufacturing -6.9%
Construction 0.2%
Crude fuel 3.0%
Manufacturing industries 0.9%
Nonmanufacturing industries 3.1%
Special groupings
Finished goods, excluding foods -0.7%
Intermediate materials less foods and feeds -0.1%
Intermediate foods and feeds -2.0%
Crude materials less agricultural products -2.8%
Finished energy goods -2.4%
Finished goods less energy -0.4%
Finished consumer goods less energy -0.6%
Finished goods less foods and energy -0.1%
Finished consumer goods less foods and energy -0.1%
Consumer nondurable goods less foods and energy 0.4%
Intermediate energy goods -1.4%
Intermediate materials less energy 0.0%
Intermediate materials less foods and energy 0.2%
Crude energy materials -6.2%
Crude materials less energy -3.3%
Crude nonfood materials less energy 2.9%
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