Call it the revenge of the hard data. Industrial production popped in April while the number of sectors contracting fell sharply:
Manufacturing itself enjoyed a healthy monthly gain:
One point to watch is the improvement in automobile assemblies:
Given tepid auto sales, this may add to inventories and ultimately place downward pressure on car prices.
Housing starts remained solid in April:
To be sure, the volatile multi-family component slid, but I think that should not be unexpected. Apartment construction bounced backed more quickly after the recession and I suspect has peaked. More of the action should now be in the single family component, which continues to gain traction. Given under-building in many markets, there seems to be plenty of room for continued growth in that sector.
From last week, retail sales growth continues, albeit as a lackluster pace:
Nothing to write home about, either good or bad.
Altogether incoming data adds up to some healthy growth expectations for the first quarter. The Atlanta Fed GDPNow tracker is looking for 4.1 percent growth in the second quarter. Still, I don't think the US economy is really posting such numbers any more than I believe first quarter growth was 0.7 percent. Take the average of the two and you get 2.4 percent, which is probably closer to reality.
This all clears the way for the Fed to hike rates again in June. But going forward, inflation remains a sticking point:
Either inflation is headed higher or the economy has more slack than the Fed believes. We will be seeing how that story plays out in the second half of this year.
