Drop in U.S. Housing Starts Shows Industry May Weigh on Growth
Three straight months of declines in new-home construction show U.S. homebuilding may weigh on second-quarter growth, Commerce Department data showed Friday.
HIGHLIGHTS FROM HOUSING STARTS (MAY)
- Residential starts decreased 5.5% to a 1.09m annualized rate (est. 1.22m), the weakest since September
- Starts in April were revised down to 1.16m, while March figures were also weaker than last reported
- Permits, a proxy for future construction, fell 4.9% to a 1.17m rate, the lowest since April 2016
May starts were pushed lower by declining construction in South, which reached the weakest level since October 2015, and in the Midwest. Construction of single-family properties dropped 3.9 percent to the lowest since September, while ground-breaking on multifamily units declined for a fifth straight month. Shortages of skilled workers and available lots have weighed on the industry even as Americans remain upbeat about home-buying. Builders have become a bit less buoyant than earlier in the Trump administration, when they registered the highest optimism since 2005, data earlier this week from the National Association of Home Builders and Wells Fargo showed.
China central bank plans fresh incentives to support green financing
China’s central bank plans to step up support for “green” financing, including incentives to encourage banks to extend more loans for projects friendly to the environment, a deputy governor, said on Friday. The People’s Bank of China is studying plans to add banks’ qualified green credit into collateral for monetary policy operations and to include institutions’ green credit performance in the central bank’s macro-prudential assessment (MPA), Chen Yulu told a news conference. The government has given interest rate subsidies and preferential tax treatment for green projects, on top of special loans from the central bank, the PBOC deputy governor said. Efforts will be made to innovate China’s green financing and lure more medium- and long-term private investment, he said. China will unify its standards on identifying green projects and “green bonds”, and improve market transparency to ensure green funds are targeted at appropriate projects, Chen said. Green projects with steady cash flows should rely on green bonds, while projects with higher potential risks should depend more on private equity funds and share listings, he said.
So, is it actually the euro zone that’s strong and stable?
The deluge of cash poured into the euro zone economy in recent years by the European Central Bank appears to have finally resulted in solid – and more importantly, steady – economic growth, along with rising inflationary pressures. To borrow a phrase from British Prime Minister Theresa May’s ill-fated election campaign, it’s beginning to look strong and stable. As well as cutting borrowing costs to rock bottom, the European Central Bank has bought well over a trillion euros of mainly government bonds as part of a battle to drive growth and get inflation back to its 2 percent target ceiling. At last, the ultra-loose monetary policy appears to be paying dividends. Euro zone growth hit its fastest rate in two years at the start of 2017, and while it has probably slowed a tad this quarter, it remains robust.