L'économie américaine plus solide qu'il n'y paraît - Morningstar

Les inquiétudes sur le risque de récession après les données de décembre sont exagérées.

Robert Johnson, CFA 19.02.2016
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Jeremy Glaser: For Morningstar, I'm Jeremy Glaser. I'm joined today by Bob Johnson--he's our director of economic analysis--to look at some industrial production and other data and see if the economy is still chugging along.

Bob, thanks for joining me.

Bob Johnson: Great to be here today.

Glaser: So, you expected going into this week that industrial production could be much stronger in January. Did the data bear that out?

Johnson: Absolutely. We did have a very good month in industrial production. Again, just to set the stage before I talk about some of the industrial-production details, this just follows on the retail-sales report last week that not only had a good month but had an upward revision for past months. A decent report for January itself. Industrial production now looks better again here in January, and so we're beginning to see signs that maybe things weren't as bad as some of the numbers in December suggested. I almost said, "Are people looking at the same data I am?" And people were thinking that maybe now we're going to have a recession. But I looked at the data and said, "No, it really doesn't appear that way." And this month's and this week's worth of data seems to suggest that, yes, indeed, we were right; we aren't falling back into a recession or having contagion.

Glaser: Production was up nine tenths of a percent on a month-to-month basis. What drove that? What were the big additions?

Johnson: First of all, let's take the headline number. Most of that was driven by the manufacturing sector, which grew about five tenths of a percent. Then, we also had some super growth on the utility side that was entirely weather related because January, by normal standards, was cooler than December, so we had more days when heating was being used. We saw utility usage between December and January, according to this report, go up 5%. That's almost 10% of industrial production overall. That combined with the manufacturing number brought us close to 1%. The mining sector, which had had many months of relatively large declines, actually was flat in the month. So, maybe even there the worst is over. There's only so much stuff you can shut down. So, I'm thinking that we got a relatively good number here. And again, I don't know how sustainable it is, but I was particularly pleased to see the manufacturing number up as strong as it was. The utilities and the mining have jumped all over the place.

Glaser: In manufacturing, was that autos? Was it chemicals? What were people making?

Johnson: You hit two of the biggies. Autos were certainly the biggest, but also chemicals and foods. All of this is interesting to remember because these are industries that generally have a more U.S. based domestic type of flavor to them. And some people would say, "Manufacturing is getting killed, the dollar is stronger, exports are getting killed." Well, yes, manufacturing is an important part of our economy. With some of the petroleum stuff, maybe they are important there. But there are a lot of groups that still are U.S. dependent--a good part of the chemicals, by the way, is pharmaceuticals. So, that's part of the reason for the strength there.

So, it's interesting to look at the data and to see that manufacturing is not falling off a cliff as everybody suspected. And this concept that the dollar is rising and manufacturing is getting killed and there's nothing left to be manufactured here just doesn't really fit the story--and we see that again and again. And the chemicals and autos story has been a consistent story for some time. The year-over-year data also says that the autos and the chemicals are the big contributors on a year-over-year basis as well. So, this is not a one-time flash in the pan. So, we're pleased there; it kind of exposes the story that there are many sectors in manufacturing that aren't export related that are doing quite well.

Glaser: This industrial-production report is showing good signs for the economy. But the housing reports, at least on a headline basis, maybe were a little bit weaker. What's going on there? Why were starts down?

Johnson: Some very confusing numbers again, as always. The starts were down. I'm guessing that was probably more weather related than anything else, and maybe we had a bunch of extra starts in December and a few less in January. It depends on the weather--the seasonal factors that they build in to try to make the numbers even. December was particularly warm, and January was a little bit more like normal. So, there's probably an element of that going on. I've almost gotten out of the habit of really wanting to look at starts very much--other than the fact that some of the starts impact the construction figures that go into GDP directly over time. What I really like to focus on is permits because it's not free to do permit. You've got to pay a fee; you've got to have the drawings ready. You've got to put up your money, so to speak. And they are less affected by considerations like which month to start in--can I get a crew in here? Is the weather bad today? All the stuff that affects starts has less of an impact on permits. And permits, overall, are still strong--almost as strong as they have been in this whole recovery and very similar to what they were at December, at 1.2 million permits.

I like to see the gap when you've got 1.1 million starts, which was modestly disappointing, [because it suggests there's more upside]. People thought it might be 1.15 million; we didn't get that extra 50,000, and some people were disappointed by that. But again, the 1.1 million--or whatever it was--you compare that to 1.2 million on the permitting process and that suggests that we've got some more upside in the months ahead. So, that's really great news as far as I am concerned, even though people might not have been thrilled with the starts number.

Glaser: Is there a big mix shift between single family and multifamily? I know that's been an issue that we've discussed at length.

Johnson: I think that still continues. I think the multifamily is highly volatile on both the starts and the permits side. And very round numbers: The single family is about twice as big as the multi, but the multis can vary a lot more and have a bigger impact on the total number. Keep in mind that multifamily units have about half the economic impact that a single-family home has. So, we really do like to focus on those single families, and there the numbers are pretty staid, if you will--about 700,000 starts and permits. That amounts to about 8%, almost 9% growth in both of those figures on an average year-over-year basis, which seems to suggest that maybe that 8% or so number is the right number to think about in terms of single family. The multifamily, unfortunately, may weigh on those numbers for the full year. I think we've gone through an incredibly good time for that group, but now we may not.

Glaser: You mentioned that there are some signs that we could have some good news ahead in housing because of where permits are. Did the homebuilder-sentiment reading show that the homebuilders themselves see that as well?

Johnson: Again, this is another number that's very confusing. The headline number is down from 61 to 58, and everybody goes, "Maybe they are not feeling so good anymore." But you peel back the onion and the data is very interesting. By the way, that sentiment number is still high. It's higher than it was a year ago. It's higher than almost any month other than a couple at the end of 2015. So, don't be too worried about even the raw level of the number. The reason it did drop back was primarily because of fewer lookers. Traffic is one of the numbers that goes into the calculation. Obviously, if you think about it, December had a great number--[the weather made it] easy to drive around. January not so much, especially if you were on the East Coast.

So, of course, the traffic was a little bit less, and that was a big contributor to the decline. It also impacted the current sales cycle just a little bit, according to the builders. That was off just a little bit. If you look at builder sentiment looking out six months from now, it actually increased from 64 to 65, which suggests maybe they are not so worried after all and maybe we'll see some improvement in the months ahead. So, we were very pleased at the overall number set. Don't be confused by the headline drop from 61 to 58. Again, you have to take everything in context. You can't just take one number, pluck it out, and say, "We're starting to go the other way."

Glaser: Bob, thanks for your analysis today.

Johnson: Thank you.

Glaser: For Morningstar, I'm Jeremy Glaser. Thanks for watching.

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Robert Johnson, CFA  Robert Johnson, CFA, is director of economic analysis with Morningstar.