US Manufacturing Industry Stabilizes as Sales of New Homes Drop to 7-Month Low

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This year, economists expect that the housing market will relatively counterbalance the manufacturing industry’s struggle. The strong housing momentum confirms that an increase in interest-rates should not be a problem this year and that the economy is still in check, the fall in housing retail sales and persistent challenges in manufacturing, notwithstanding.

Housing Market

In June, sales of newly-built single-family homes in the US continually went down on its seventh month, and sales in May were modified with an abrupt cutback. Recently released figures were insignificant to market recovery, thus a setback in the presumed improvement.

According to the Commerce Department, this has been the lowest drop since November with a 6.8 percent decline to the periodically adjusted rate of 482,000 units a year. In May, sales from the reported 546,000 units were reduced to 517,000 units. In addition, new homes sales are only about 8.1 percent in the housing market and tend to be unpredictable on a monthly premise. June’s upsetting drop with May’s adjustments is likewise inconsistent with other housing data.

However, improvement of the overall housing market remains intact despite the consecutive months of declines. Sales as of June were 18.1 percent higher compared to the same period last year.

Along with Daniel Silver’s testimony that the signal from new homes sales data at this point aren’t to be worried about, a report showed that home resales increased eightfold in June, in addition to building permits and housing developments that almost reached an 8-year peak in June as builders augmented work on apartment projects. Silver is an economist at JP Morgan in New York.

The housing industry is substantiated with an increasing labor market with promising growing demands. Moreover, through mortgage finance firms like Fannie Mae and Freddie Mac, the government provides lending assistance for first-time buyers.

Manufacturing Sector

The US manufacturing industry displayed stabilizing signs in July. In a report from financial data firm Markit, the US Manufacturing Purchasing Manager’s index escalated to 53.8 from a 20-month low of 53.6 in June, which indicates an expansion in the factory sector. Any value above the 50 point mark represents growth.

Despite the gain, reductions in investment spending in the energy sector continued to weigh on sales, coupled with a modest increase in new work overseas. The latter ended in three months of decreasing export sales within the manufacturing industry. Thus, the industry was radical about hiring.

Jess Hurwitz, an economist at Barclays in New York, accordingly stated that the Markit survey confirms that US manufacturing might experience a gradual progress in the third quarter.

In spite of the drop in retail sales coupled with a struggling manufacturing sector, the US economy remained solid compared to its global peers. Wall Street stocks were trading lower recently, while prices for US government debt increased slightly, resulting to stronger dollar value compared to several other currencies. The Chinese manufacturing industry is down to a 15-month low in July while European business activity slowed down, all blamed on the effect of the debt crisis in Greece.

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