U.S. housing starts increased 8.2% in April 2008 -- an upside surprise skewed by a 36% rise in multi-family unit construction. Housing starts totaled a 1.032 million annual rate in April 2008, the U.S. Commerce Department announced (pdf) Friday.

Economists surveyed by Bloomberg News had expected housing starts to total a 940,000 annualized rate in April 2008.

Still, housing starts are down 31% in the past year and single-family starts are down 42%, the largest decline for single-family starts since 1992.

Meanwhile, building permits, a measure of future construction, increased 4.9% to a 978,000 annualized rate in April 2008; single-family permits increased 4% and multi-family permits climbed 6.8% during the month.

U.S. business inventories rose a scant 0.1% in March 2008 (pdf), the U.S. Commerce Department announced Tuesday -- the smallest inventory rise in a year.

Economists surveyed by Bloomberg News had expected March 2008 inventories to rise 0.5%.

Also, the March 2008 inventory-to-sales ratio declined to 1.27. Meanwhile, the February 2008 business inventory statistic was revised higher to an increase of 0.2%.

Inventories: Two-sided stat

Economist David H. Wang told BloggingStocks Tuesday the March 2008 inventory data can be interpreted two ways, with positive and negative dimensions.

On the one hand, businesses are keeping inventories at a bare minimum -- a fact that typically is bearish, short-term, for the U.S. economy, Wang said. "It can reflect a lack of business confidence in the economy's ability to grow in the short run," he said.

On the other hand, those same lean inventories mean that any sustained increase in demand will require businesses to ramp-up production quickly -- a phenomenon that generally limits the length of a recession / economic downturn, Wang said.

Another positive dimension to lean inventories: companies will not have to trim as many employees if the U.S. economy slows further. "In all, this month's inventory report contained a lukewarm stat," Wang said. "The best aspect of it is, businesses are prepared for a further downturn in the economy, should it occur."

The U.S. trade deficit fell substantially in March 2008, to $58.2 billion, the U.S. Commerce Department announced Thursday, as the slowing U.S. economy reduced consumer demand for imported automobiles, furniture and consumer goods, among other categories.

The March 2008 trade statistic was the lowest trade gap since November 2003, the Commerce Department said.

Economists surveyed by Bloomberg News had expected the March 2008 trade deficit to be $60.8 billion.

The February 2008 trade deficit was revised lower to $61.7 billion from $62.3 billion. The trade deficit was $59.0 billion in January 2008.

In March 2008, nominal imports decreased 2.9% to $206.7 billion, while nominal exports fell 1.7% to $148.5 billion.

Slowing U.S. economy weighs

Economist David H. Wang told BloggingStocks Friday the March 2008 trade report clearly displays the effects of a slowing U.S. economy.

"We see a clear pullback in domestic demand in March [2008], and the core import number was down 3%, so that's indicative of fewer consumers making purchases, which is consistent with belt-tightening and U.S. payroll reductions," Wang said. "It's clear now our nation is demanding less from international suppliers, which will have a negative effect on their economies, as well."

U.S. factory orders increased a surprising 1.4% in March 2008, the U.S. Commerce Department announced Friday, on rising international demand for U.S. goods. It was the fastest growth for factory orders since December 2007.

Economists surveyed by Bloomberg News had expected March 2008 factory orders to increase by 0.3%. Factory orders fell a revised 0.9% in February 2008, slightly better than the previously announced decline of 1.3%.

Also factory orders, excluding the volatile transportation equipment component, increased 2.2% in March 2008.

Economists follow the factory orders statistic because it provides one of the most comprehensive surveys of advance orders for durable goods -- how busy factories are likely to be in the period ahead. Factory orders also are a major value-added component of the U.S. economy.

Orders for durable goods increased 0.1% in March 2008, revised up from the 0.3% decline estimated a week ago. Orders for nondurable goods rose 2.6%, unfilled orders increased 1.1%, shipments climbed 1.1%, and inventories for manufactured goods rose 1.1%.

U.S. economy's saving grace: exports

Economist Peter Dawson told BloggingStocks Friday the economy "is making a concerted effort to complicate economists lives" by recording stronger-than-expected economic data, of late.

Consumer spending increased 0.4%, but rose just a scant 0.1% after adjusting for inflation, in March 2008, the U.S. Commerce Department announced Thursday, as higher prices eroded income gains for Americans.

Further, it was the fourth straight month of sub-par real consumer demand.

Economists surveyed by Bloomberg News had expected March 2008 consumer spending to increase 0.3%.

Meanwhile, inflation accelerated in March 2008, with consumer prices increasing 0.3%. Core prices, which exclude food and energy, also increased just 0.2%. For the past 12 months, consumer prices have increased 3.2%, while the core rate has increased 2.1%, or just above the U.S. Federal Reserve's inflation ceiling, commonly referred to as the Fed's 'comfort zone.'

The U.S. economy grew at a 0.6% annual rate in Q1 2008, the U.S. Commerce Department announced Thursday, a slow pace but still considerably better than what economists had expected. It was the same GDP growth rate as Q4 2006.

Economists surveyed by Bloomberg News had expected Q1 2008 GDP to be 0.3%.

The quarter was led by export strength, an inventory rise and surprisingly strong consumer spending -- the latter rose at a 1% annual pace in the quarter. Still, consumer spending is running at its lowest pace in seven years. Inventories rose at a 0.8% annual pace, but business investment dropped 2.5% in the quarter.

Meanwhile, the report's consumer price index increased at an annual rate of 2.6% compared with a 2.4% rise in the prior quarter.

U.S. new home sales fell to a seasonally-adjusted, annualized pace of 526,000 in March 2008 - - a 17-year low, the U.S. Commerce Department announced Thursday. (pdf)

Economists surveyed by Bloomberg News had expected March 2008 new home sales to register a 580,000 annualized rate.

Sales have now declined for five consecutive months, and are down 36.6% in the last 12 months.

Meanwhile, inventories surged to an 11-month supply at the March 2008 sales rate, up from a 9.8-month supply in February. Inventories are at their highest level since 1981. A healthy housing market typically has a 3-4 month supply.

Also, February 2008 sales were revised down slightly, to 575,000 from the earlier released 590,000.

In addition, the median sales price of new houses sold in March 2008 was $227,600; the average sales price was $292,200. The median sales price has now decreased 13.3% in the past 12 months.

Sales fell in every U.S. region: declining 19.4% in the Northeast, 12.9% in the West, 12.5% in the Midwest, and 4.6% in the South.

U.S. durable goods orders fell 0.3% in March 2008, as demand for machinery dropped substantially, the U.S. Commerce Department announced Thursday.

Economists surveyed by Bloomberg News had expected March 2008 durable goods orders to rise 0.6%. Durable goods orders decreased a revised 0.9% in February 2008.

Excluding transportation, durable goods orders rose 1.5% in March 2008.

In March 2008 core capital goods orders were flat, after declining the previous two months. Inventories rose 1.1%, the category's eighth increase in the past nine months. Shipments decreased 0.4%, its fourth decline in the last five months. Unfilled orders increased 0.9%.

Another negative datapoint

Economist David H. Wang told BloggingStocks Thursday the March 2008 durable goods statistic is additional bad news for the U.S. economy.

"Demand continues to weaken, and a third straight durable goods order decline indicates that the U.S. economy is contracting. For the economy to grow, we must see stronger durable goods demand, " Wang said. "If you exclude the defense-related hardware component, the durable goods order statistic would have been even worse. U.S. corporations continue to benefit from international demand, but those exports are not enough to overcome clear weakness in orders and sales at home."

U.S. housing starts plunged in March as builders continued to cut back construction in the face of the nation's worst housing slump in more than a decade.

Housing starts totaled a 947,000 annual rate, the U.S. Commerce Department announced Wednesday (pdf) - - the lowest annualized rate since March 1991. The February housing start statistic was revised to a 1.075-million-unit annual rate.

Economists surveyed by Bloomberg News had expected housing starts to total a 1.02 million annualized rate.

Meanwhile, building permits, a measure of future construction, fell to a 927,000 annualized rate in March from 984,000 in February.

Single-family home permits dropped 5.7% to a 680,000 pace. Construction of multifamily homes, which includes townhouses and apartment buildings, plummeted 25% to an annual rate of 247,000 in March 2008.

Economist Glen Langan told BloggingStocks Wednesday many potential homebuyers are doing what you'd expect them to do in a sluggish housing sector, and builders are responding accordingly. "Potential home buyers are simply delaying their home purchase, if they aren't putting it off entirely, until the market stabilizes," Langan said. "And builders are following that signal. They're cutting back construction in the face of these large home inventories."

Langan added that he expects the nation's supply of unsold homes, currently about a 9.5- to 10-month supply at present sales rates, to increase to about an 11-month supply by the summer 2008, before inventories start to work-off. A healthy home sale market typically has a 3-4 month supply of homes on the market.

U.S. business inventories increased 0.6% in February 2008 to $1.468 trillion, the U.S. Commerce Department announced Monday.

Economists surveyed by Bloomberg News had expected inventories to increase by 0.6% in February 2008.

Meanwhile, sales declined 1.1% in February 2008, the category's largest drop since January 2007.

Also, the inventory-to-sales ratio, an indicator of demand, increased to 1.28 in February 2008 from 1.26 in January 2008.

Economists, business executives, monetary officials and investors/traders monitor the inventories statistic because it can indicate business optimism and/or growing sales in the months ahead.

Further, the ratio of inventories-to-sales can help investors determine whether production demand will expand or contract in the near future -- a major factor in U.S. GDP growth.

Economic Analysis: A sub-par February 2008 business inventories report. The key statistic is the 1.28 inventory-to-sales ratio, which continues to increase. It's been rising since late 2007 -- and a sustained rise historically indicates, at minimum, economic sluggishness up ahead; at worst, a recession. For example, the ratio increased throughout 2001, prior to the start of the U.S.'s last recession. Conversely, it decreased throughout the ensuing, nearly 6-year economic expansion.

The U.S. trade deficit unexpectedly widened in February 2008, the U.S. Commerce Department announced Thursday, as automobile and machinery imports offset record exports.

The February 2008 trade deficit increased to $62.3 billion - - its highest total since November 2007 - - and an increase over January 2008's revised total of $59.0 billion.

Economists surveyed by Bloomberg News had expected the February 2008 trade deficit to be $57.5 billion.

Excluding services, imports increased 3.5% to $180.2 billion, while exports rose 2.4% to $104.7 billion.

Exports shine

On the bright side, U.S. exports rose for the 12th consecutive month, representing one of the few solidly-performing dimensions of the otherwise anemic U.S. economy. Economists say the weaker U.S. dollar is assisting export sales, as it makes U.S. goods less expensive abroad. On Thursday, the dollar also fell to a record low $1.59 versus the euro.

Another bright point: the U.S. petroleum deficit decreased to $32.5 billion, its first decline in eight months. A decline in the quantity of oil imported offset a record oil price of $84.76 per barrel.

U.S. factory orders declined 1.3% in February 2008, the U.S. Commerce Department announced Wednesday, as the nation's manufacturers and wholesalers continued to trim operations on slack demand stemming from the U.S. economic slowdown.

Economists surveyed by Bloomberg News had expected February 2008 factor orders to decline 0.6%. Factory orders declined by a revised 2.3% in January 2008. Economists follow the factory orders statistic because it provides one of the most comprehensive surveys of advance orders for durable goods -- how busy factories are likely to be in the period ahead. Factory orders also are a major value-added component of the U.S. economy.

Also, in March 2008 shipments fell 2.1%, durable goods orders fell 1.1%, and new orders declined 1.1%.

Real consumer spending increased a scant 0.1% in February 2008, the U.S. Commerce Department announced Friday, inline with expectations. It was the third straight month of sub-par consumer demand, suggesting that a major component of U.S. economic growth is faltering, which typically leads to a recession.

Meanwhile, inflation eased in January 2008, with consumer prices increasing 0.1%. Core prices, which exclude food and energy, also increased just 0.1%. For the past 12 months, consumer prices have increased 3.4%, while the core rate has increased 2%, or below the U.S. Federal Reserve's inflation ceiling, i.e. within the Fed's 'comfort zone.'

In addition, personal income increased 0.5% in February 2008, with wages and salaries increasing 0.3%, asset income rising 0.2%, while rental income plunging 5.3%. This increase in income was above expectations of 0.3%.

Economic Analysis: One negative and one positive data point for the U.S. economy in the report. The essentially flat 0.1% increase in consumer spending for the third straight month is indicative of a slowdown in consumer demand, which suggests, at minimum, continued economic sluggishness ahead. A bright point: core inflation, running at 2.0%, remains below what the U.S. Federal Reserve considers to be excessive. If the core rate doesn't increase, that should provide additional leeway for the Fed to further lower short-term interest rates, should it choose to do so.

The U.S. economy slowed substantially in Q4 2007 to a 0.6% annualized rate, the U.S. Commerce Department announced Thursday, in its final estimate for the quarter. It was the slowest annualized growth rate since 2002.

Economists surveyed by Bloomberg News had expected the final Q4 2007 GDP statistic to be 0.6%.

For 2007, the U.S. economy grew 2.2%, after adjusting for inflation -- its slowest growth rate in five years. The U.S. economy grew 2.9% in 2006.

In dollar terms, U.S. GDP in 2007 totaled $13.84 trillion, not adjusted for inflation.

In Q4 2007, business inventories increased 6%, exports increased 6.5%, government spending rose 2%, imports fell 1.4% and residential investment plummeted 25.2%.

The report was a virtual carbon-copy of the Commerce Department's earlier estimate for Q4 2007 GDP, save new data on corporate profits, which were revised $37.9 billion lower to a $1.11 trillion annualized rate. Corporate profits after taxes are up 3.3% from a year ago.

U.S. new home sales fell to a seasonally adjusted, annualized pace of 590,000 in February 2008 -- a 13-year low, the U.S. Commerce Department announced Wednesday (click here for the pdf).

Economists surveyed by Bloomberg News had expected February 2008 new home sales to register a 575,000 annualized rate.

Sales have now declined for four consecutive months, and are down about 30% in the last 12 months.

Meanwhile, January 2008 sales were revised up slightly, to 601,000 from the earlier released 588,000.

The number of homes on the market declined 2.1% to 471,000, the lowest level since July 2005. Also, the median sales price fell 2.7% in February 2008 to $244,100.