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Weekly Market Insights

May 20, 2022 Volume 9 Issue 20

Fears of an economic slowdown due to higher prices were intensified this week, as disappointing earnings results from major retailers, exasperated investor sentiment and pushed equity markets lower for a 7th consecutive week.

Weekly Highlights:

  • Sales at US retailers rose a smaller-than expected, but still solid, 0.9% in April. Additionally, sales in March were revised up to 1.4%, double its original estimate of 0.7%. Last month’s increase was broad-based but led by a 2.2% rebound in vehicle sales, while gas station sales dropped by 2.7%, mainly due to lower gasoline prices. Excluding vehicles and gasoline stations, sales were up a solid 1.0%. On a y/y basis, retail sales were 8.2% higher.
  • The NAHB Housing Market Index dropped eight points to 69 in May, its lowest level in nearly two years and well below expectations. Index components were lower, but the decline was led by a 10-point drop in sales expectations over the next six months, as rising mortgage rates and higher construction costs continue to hamper affordability.
  • Housing starts edged down 0.2% in April to an annual rate of 1.72 million units, its third decline in four months and slightly below expectations. The decline was led by a 7.3% drop in single-family starts, while multifamily starts jumped 16.8%. On a y/y basis housing starts still increased 14.6%.
  • Issuance of building permits also fell, dropping by 3.2% to an annual rate of 1.82 million units. Like starts, single-family permits led the decline, falling by 4.6%, while multifamily starts were off a smaller 1.0%. On a y/y basis, issuance of building permits increased 3.1%.
  • Industrial production (IP) increased 1.1% in April, the most in six months and more than double the expected gain of 0.5%. Manufacturing output, which accounts for ¾ of IP, rose a solid 0.8%, while utilities output and mining increased 2.4% and 1.6% respectively. IP was up 6.4% on a y/y basis.
  • Employment activity was mixed with initial claims for unemployment insurance climbing to a four-month high of 218,000, while continuing claims fell to their lowest level since December 1969, falling by 25,000 to 1.38 million, as labor market conditions remain extremely tight.

The Week Ahead:

  • Economic releases will include preliminary readings on services and manufacturing activity for the month of May, current readings on consumer spending and personal income, PCE inflation data and the second estimate of Q1 GDP.

Have a great weekend.

The data and commentary provided herein is for informational purposes only. No warranty is made with respect to any information provided. It is offered with the understanding that Hilltop Holdings Inc., PlainsCapital Corporation, Hilltop Securities and PlainsCapital Bank (collectively “PCB”) are not, hereby, rendering financial and/or investment advice, and use of the same does not create any relationship with PCB. This is neither an offer to sell nor a solicitation of an offer to buy any securities that may be described or referred to herein. PCB does not provide tax or legal advice. Please consult your own tax or legal advisor regarding your specific situation. Whether any of the information contained herein applies to a specific situation depends on the facts of that particular situation. Investment and estate planning and management decisions may have significant financial consequences and should be made only after consulting with professionals qualified to offer legal, accounting and taxation advice. Neither this document nor any portion of its content’s supplements, amends or modifies any account agreement with PCB. Unless otherwise noted:

*All economic release data referenced from public sources believed to be accurate       *The source of data for all charts/graphs included in this presentation is Bloomberg LP.       *Figures quoted represent monthly changes (m/m) and are seasonally adjusted

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