Weak housing data
US housing starts data came out yesterday. The housing numbers for February came in weaker than expected. Housing starts declined by 8.7% to 1.162 million units in February from 1.27 million units in January. Economists were expecting housing starts to total 1.214 million. The construction of single-family homes declined fell to nearly a two-year low. Building permits also fell 1.6% to 1.296 million in February, marking the second consecutive monthly drop.
One of the main reasons for weakness in the housing market has been rising interest rates. Now, as the Fed has signaled a pause in rate hikes, affordability should rise. However, if economic conditions worsen, the housing market might not recover as expected.
According to Wells Fargo senior economist Mark Vitner, “Even with the recent slide in interest rates, which reflects weakening economic conditions, we do not feel we will see a rebound in housing demand until the storm clouds emanating from slower global economic growth clear later this year.”
US (DIA) manufacturing production also fell 0.4% in February, marking the second straight month of output contraction. China’s (FXI) industrial data showed that production grew 5.3% year-over-year in January and February combined, a 17-year low. The latest set of weak data from the Eurozone (HEDJ)(EZU) added to the risk-off sentiment, which weighed negatively on the stock markets (SPY).
Currently, the markets face many concerns. In addition to weak European data, the ongoing trade talks between the United States (IVV) and China (FXI) are adding to the uncertainty. Check out Trump’s at It Again: Markets Spooked by Tariff Warning for more analysis.
Many companies—including FedEx (FDX), BMW (BAMXF), and UBS—have been warning about the slowing global economy. US companies Apple (AAPL) and NVIDIA (NVDA) have warned that China’s slowdown is hurting their earnings.