Interest Rate Roundup

Wednesday, January 31, 2007

NAPM reports, construction data, housing affordability news -- it's all here...

The Chicago Purchasing Managers Index was surprisingly weak in January. It came in at 48.8 vs. a December reading of 51.6 and a forecast of 52. Readings on new orders, employment, and inventories were down big, a reading on prices paid was down small, and a reading on production was up by a decent margin.

On the other hand, the Milwaukee NAPM measure (yes, the state of Wisconsin releases important economic reports ... don't mock! LOL) was strong. It came in at 63, up from 58 in December. Readings on new orders, production and prices rose, as did indicators of employment.

Construction spending? -0.4% on the month vs. a forecast for no change. The November reading was revised down to -0.2% vs. a previous reading of +0.1%. I'll give you a wild guess where the most weakness showed up. Yep -- residential spending, at -1.6%. That's the biggest monthly decline since August. Nonresidential spending growth also decelerated -- to +0.8% from +1.8% in November. Every category of nonresidential spending (lodging, office, health care, etc.) weakened, except for public safety, transportation, and manufacturing.

Meanwhile, the National Association of Realtors' monthly home affordability index (PDF link) slumped in December. It came in at 109.2 vs. 110.7 in November. Longer term, it's above the July trough of 99.6, but well below the 120-140 range we consistently saw between 1992 and 2004. This just goes to show that the meteoric rise in prices has forced American families to stretch more to afford homes.


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