US housing starts and industrial activity posted solid increases in April, rising by stronger-than-expected rates last month. But the upbeat news is clouded by negative trends for the year-over-year data. In the housing sector, the change in tone on the downside is conspicuous—for the first time in 13 months, new residential construction and newly issued building permits fell relative to their respective year-earlier levels. Meanwhile, industrial output rebounded sharply in April, rising by a better-than-projected 0.7%. But the improvement wasn’t enough to reverse the red ink in the annual comparison. As a result, US industrial activity contracted last month in year-over-year terms–as it’s been doing since last September.
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The spread between long and short Treasury yields has been narrowing lately, a change that some analysts see as a warning sign for US economic growth. The current numbers overall suggest that that the macro trend is sliding into the business-cycle ditch, but there’s still plenty of concern about painfully slow growth. How slow can it go before tipping into a formal recession? No one really knows, but the flatter yield curve these days is attracting attention in the wake of wobbly equity prices and mixed economic news.
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● NAHB Index Unchanged in May, Pointing to Steady Housing Growth | WSJ
● NY Fed Mfg Index fell sharply in May | MarketWatch
● Corp bonds trouncing Treasuries in 2016 | Bloomberg
● Oil near 6-month high as outages support prices | Reuters
● The economic source of the current anger | WaPo