• Business Applications Up 4.5% and Business Formations Up 5.4%

    The U.S. Census Bureau announced the following seasonally adjusted business application and formation statistics for March 2023. The Business Application Series describe the business applications for tax IDs as indicated by applications for an Employer Identification Number through filings of the IRS Form SS-4. The Business Formation Series describe employer business formations as indicated by the first instance of payroll tax liabilities for the corresponding business applications.

    Business Applications

    Business Applications for March 2023 were 451,752, an increase of 4.5% compared to February 2023.

    Business Formations

    Projected Business Formations (within 4 quarters) for March 2023 were 33,663, an increase of 5.4% compared to February 2023. The projected business formations are forward looking, providing an estimate of the number of new business startups that will appear from the cohort of business applications in a given month. It does not provide an estimate of the total number of business startups that appeared within a specific month. In other words, the Census Bureau is projecting that 33,663 new business startups with payroll tax liabilities will form within 4 quarters of application from all the business applications filed during March 2023. The 5.4% increase indicates that for March 2023 there will be 5.4% more businesses projected to form within 4 quarters of application, compared to the analogous projections for February 2023.

    More Data Later This Week

    More economic data will be released later this week, including MBA Mortgage Applications on Wednesday and Jobless Claims and Existing Home Sales on Thursday.

    Sources: census.gov

  • Wholesale Sales Jump in February While Inventories Rise Modestly

    Wholesale trade measures the dollar value of sales made and inventories held by merchant wholesalers. It is a component of business sales and inventories.

    Wholesale sales and inventory data give investors a hint as to where the consumer economy might be headed as it can be a precursor to consumer trends. For example, by analyzing the ratio of inventories to sales, investors can see how fast production will grow in coming months. Likewise, if unintended inventory accumulation occurs (i.e. sales did not meet expectations), then production will likely slow while those inventories are worked down.

    Wholesale Inventories in February On Monday, the U.S. Census Bureau reported the following new wholesale trade statistics for February 2023:

    Sales

    • February 2023 sales of merchant wholesalers, except manufacturers’ sales branches and offices, were $669.5 billion, up 0.4% from the revised January level.
    • This is up 1.3% from the revised February 2022 level.
    • The December 2022 to January 2023 percent change was revised from the Monthly Wholesale Annual Revision Report of up 0.9% to up 0.4%.

    Inventories

    • Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, were $919.2 billion at the end of February, up 0.1% from the revised January level.
    • Total inventories were up 12.0% from the revised February 2022 level.
    • The January 2023 to February 2023 percent change was revised from up 0.2% to up 0.1%.


    Inventories/Sales Ratio

    • The February inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, was 1.37.
    • The February 2022 ratio was 1.24.

    More Data Later This Week

    More economic data will be released later this week, including CPI and MBA Mortgage Applications on Wednesday; Jobless Claims and PPI-Final Demand on Thursday; and Retail Sales, Business Inventories, Industrial Production and Consumer Sentiment on Friday.

    Sources: census.gov

  • Construction Spending Down in February But Up Year-Over-Year

    On Monday, the U.S. Census Bureau reported that construction spending during February 2023 was at an annual rate of $1,844.1 billion, 0.1% below the revised January estimate of $1,845.4 billion.

    • The February figure is 5.2% above the February 2022 estimate of $1,753.1 billion.
    • During the first two months of this year, construction spending amounted to $260.8 billion, 5.9% above the $246.1 billion for the same period in 2022.

    Private Construction

    • Spending on private construction was at a seasonally adjusted annual rate of $1,453.2 billion, virtually unchanged from the revised January estimate of $1,453.6 billion.
    • Residential construction was at a seasonally adjusted annual rate of $852.1 billion in February, 0.6% below the revised January estimate of $857.0 billion.
    • Nonresidential construction was at a seasonally adjusted annual rate of $601.0 billion in February, 0.7% above the revised January estimate of $596.7 billion.

    Public Construction

    • In February, the estimated seasonally adjusted annual rate of public construction spending was $391.0 billion, 0.2% below the revised January estimate of $391.8 billion.
    • Educational construction was at a seasonally adjusted annual rate of $84.6 billion, 0.9% below the revised January estimate of $85.4 billion.
    • Highway construction was at a seasonally adjusted annual rate of $120.6 billion, 0.3% above the revised January estimate of $120.3 billion.


    Construction Spending Over 20 Years

    More Data Later This Week

    More economic data will be released later this week, including the ADP Employment Report, MBA Mortgage Applications and ISM Services Index on Wednesday; Jobless Claims on Thursday; and Consumer Credit on Friday.

    Sources: census.gov

  • Modest Growth in Texas Manufacturing But Outlook Worsens

    The Federal Reserve Bank of Dallas conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month. Responses are aggregated into balance indexes where positive values generally indicate growth while negative values generally indicate contraction.

    On Monday, the Dallas Fed ran this headline:

    Modest growth resumes in Texas manufacturing, but outlooks continue to worsen

    From the release: “Texas factory activity expanded slightly in March after contracting in February. The production index, a key measure of state manufacturing conditions, moved up from -2.8 to 2.5, a reading suggestive of a modest increase in output.

    Further, other measures of manufacturing activity showed mixed signals this month, including:

    • The new orders index was negative for a 10th month in a row and came in at -14.3, little changed from February.
    • The growth rate of orders index was also negative and largely unchanged, at -15.2.
    • The capacity utilization index returned to positive territory, moving up six points to 2.3.
    • The shipments index pushed down from -5.0 to -10.5.

    Perceptions of broader business conditions continued to worsen in March. The general business activity index slipped two points to -15.7. The company outlook index remained negative but rose four points to -13.3. The outlook uncertainty index came in at 22.0, down slightly from February but still elevated.

    Labor market measures suggest a resumption of employment growth and continued lengthening of workweeks. The employment index shot up 11 points to 10.4 after dipping below zero last month. Twenty-four percent of firms noted net hiring, while 14 percent noted net layoffs. The hours worked index edged down to 2.6, a reading slightly below average.

    Price and wage pressures receded in March, though wage growth remained elevated relative to average. The raw materials prices index retreated five points to 20.3, falling further below its series average of 27.9. The finished goods prices index dropped from 15.8 to 7.0, falling below its series average of 9.0 for the first time since 2020. The wages and benefits index inched down two points to 30.5.

    Expectations regarding future manufacturing activity were mixed in March. The future production index remained positive but fell eight points to 13.5, signaling well-below-average output growth is expected over the next six months. The future general business activity index pushed further negative, from -2.9 to -11.2. Most other measures of future manufacturing activity remained positive but moved lower this month.

    Sources: dallasfed.org

  • Existing Home Sales Jump in February as Median Home Prices Slide for the First Time in Almost 11 Years

    On Tuesday, the National Association of Realtors reported that “existing-home sales reversed a 12-month slide in February, registering the largest monthly percentage increase since July 2020. Month-over-month sales rose in all four major U.S. regions. All regions posted year-over-year declines.

    • Total existing-home sales completed transactions that include single-family homes, townhomes, condominiums and co-ops – vaulted 14.5% from January to a seasonally adjusted annual rate of 4.58 million in February.

    • Year-over-year, sales fell 22.6% (down from 5.92 million in February 2022).

    • Total housing inventory registered at the end of February was 980,000 units, identical to January and up 15.3% from one year ago (850,000).

    • Unsold inventory sits at a 2.6-month supply at the current sales pace, down 10.3% from January but up from 1.7 months in February 2022.”

    Existing Home Sales

    Median Prices Slide After 131 Months of Gains

    • “The median existing-home price for all housing types in January was $363,000, a decline of 0.2% from February 2022 ($363,700), as prices climbed in the Midwest and South yet waned in the Northeast and West.

    • This ends a streak of 131 consecutive months of year-over-year increases, the longest on record.

    • Properties typically remained on the market for 34 days in February, up from 33 days in January and 18 days in February 2022.

    • Fifty-seven percent of homes sold in February were on the market for less than a month.

    • First-time buyers were responsible for 27% of sales in February, down from 31% in January and 29% in February 2022.

    • All-cash sales accounted for 28% of transactions in February, down from 29% in January but up from 25% in February 2022.

    • Distressed sales – foreclosures and short sales – represented 2% of sales in February, nearly identical to last month and one year ago.

    Regional Breakdown

    • Existing-home sales in the Northeast improved 4.0%, down 25.7% from February 2022. The median price in the Northeast was $366,100, down 4.5% from the previous year.

    • In the Midwest, existing-home sales grew 13.5%, declining 18.7% from one year ago. The median price in the Midwest was $261,200, up 5.0% from February 2022.

    • Existing-home sales in the South rebounded 15.9% in February, a 21.3% decrease from the prior year. The median price in the South was $342,000, an increase of 2.7% from one year ago.

    • In the West, existing-home sales rocketed 19.4% in February, down 28.3% from the previous year. The median price in the West was $541,100, down 5.6% from February 2022.”

    Sources: nar.realtor