January housing starts pick up the pace
The seasonally adjusted annual rate of housing starts in January increased nearly 10% to 1,326,000. It was the highest monthly total housing start figure since October of 2016. Compared to January a year ago, the current rate is up 7.3%.
Single-family starts also rose in January – up 3.7% to a rate of 866,000, compared to the revised December figure of 846,000.
Meanwhile, building permits produced mixed results. January’s total figure of 1,396,000 privately owned housing units authorized by building permits marked a 7.4% increase above December. Single-family building permits declined 1.7% month to month.
Home builders were pleased with the report, and the direction of residential construction in general. “The growth in production is in line with our reports of solid builder confidence in the housing market,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “A pro-business regulatory climate and increasing housing demand are boosting builders’ optimism, even as they continue to face supply-side hurdles such as rising construction material prices and access to lots and labor.”
Generac powers up an acquisition
Generac Holdings agreed to acquire a Mexican maker of industrial generators. Officially, General will acquire the shares of Selmec Equipos Industriales, S.A. de C.V. and its wholly-owned subsidiaries from Enesa Energia, S.A. de C.V. and Enesa, S.A. de C.V. The agreement includes the power generator product and after-sale support services of the business.
Selmec, founded in 1941 and headquartered in Mexico City, is a designer and manufacturer of industrial generators from 10 kW to 2,750 kW. It has about 300 employees and 100,000 sq.ft. of production capacity.
“Selmec’s deep experience in standby energy solutions, specifically telecom, data center and other mission critical applications, where power is essential for operational continuity, makes this a great fit for our Latin America strategy,” said Ricardo Navarro, Generac’s senior VP – Latin America. “Acquiring Selmec will allow us to dynamically scale our existing Ottomotores business, leveraging both distribution and operational footprints of the combined businesses to offer the Latin American market a broader portfolio of products and solutions.”
Financial terms of the deal were not divulged.
“This is a very exciting development for Selmec to partner with a global leader in power generation technology to offer an expanded portfolio of products and solutions. This transaction will allow Selmec to continue to innovate, leveraging Generac’s technical capabilities and expertise especially in gaseous powered generation,” said Gabriel Hajj, Selmec’s CEO and principal at Enesa. “We are pleased to join the Generac family, and we look forward to our continued success as we work together to provide greater value to our customers.”
The transaction is expected to close in three to six months following pending receipt of required regulatory approval.
More growth at retail, says NRF
The National Retail Federation released its 2018 economic forecast, projecting that retail industry sales will grow between 3.8% and 4.4% over 2017. Online and other non-store sales, which are included in the overall number, are expected to increase between 10% and 12%. The numbers exclude automobiles, gasoline stations and restaurants.
Retail sales grew 3.9% in 2017 over 2016 to $3.53 trillion, according to the U.S. Census bureau’s preliminary estimate for the year. The number is subject to revision but exceeded NRF’s forecast for growth between 3.2 and 3.8 percent.
“A robust holiday season for retail sales is just one of many barometers that points to a consumer that is clearly feeling positive about their financial health,” NRF President and CEO Matthew Shay said. “Despite headlines to the contrary, the retail industry is strong, growing and meeting consumer demand with the products they want at the prices they expect and the shopping experience they want to have, online or in store. With consumer confidence high, unemployment low and wages growing, there is every reason to believe that retail sales will be robust throughout the year.”
“The underpinnings of the economy are very good and consumer spending is at the center of our outlook,” NRF Chief Economist Jack Kleinhenz said. “The push and pull of forces both external and internal to the U.S. economy will continue to provide challenges, but on balance we expect a good year. And as the retail industry continues to transform, retailers will leverage the new tax plan to invest in their employees, stores and new formats that engage with the ever-evolving and demanding consumer.”
Additional Economic Insights:
• The overall economy is expected to gain an average of 163,000 jobs a month, down slightly from 2017 but consistent with labor market growth.
• Unemployment is expected to drop to 3.9% by the end of the year.
• Gross domestic product growth is likely to be in the range of 2.5% to 3%.