U.S.:  Weakness in manufacturing and housing

U.S.: Weakness in manufacturing and housing

The manufacturing sector continues to stumble. Overall industrial production slipped -0.1% m/m in March vs. expectations of a +0.3% gain, pushing the y/y rate down to +2.8%. Just six months ago it was +5.4%. The manufacturing component was unchanged on the month but the y/y rate has fallen to +1.0%, the slowest in over two years. The declines have been led by apparel, which has plunged -14.5% in the past year, and motor vehicles, which fell -2.5% m/m to a -4.5% y/y loss. Nine of 19 manufacturing sectors have contracted in the last year. Housing woes continue despite the fact that the Housing Market Index gained one point to 63, indicating expansion. However, the index has yet to recover from a sharp drop in November and is down -5 points in the past year. As usual, the “Traffic of Prospective Buyers” component is lagging at 47, indicating homebuilders are seeing a decline in foot traffic. Economy-wide, many recent reports have been soft, but we maintain our forecast for solid GDP growth of +2.5% for 2019.