Financial and Economic Brief - June 20, 2017by © Liberty Publishing, Inc.
Home Construction Slowing
According to the U.S. Commerce Department, housing starts fell 5.5% in May to a seasonally adjusted annual rate of 1.09 million units. This signifies that the shortage of houses for sale might worsen. In fact, it was the third straight month that the pace of construction had slowed with a 2.7% drop in April and 7.7% drop in March. Furthermore, building permits fell 4.9% to 1.17 million. Home construction is still 3.2% higher year-to-date, but it is too modest to address the diminishing supply of homes. Many analysts expect the job gains to translate into more home construction.
Foreign Stock Funds on the Rise
According to Morningstar, the most popular category of foreign stock funds returned an average of 14.9% this year and funds that focus on stocks from China and other emerging markets have returned 18.1%. This after foreign stocks struggled for almost a decade. Overseas stocks have been moving higher on expectations that economic and profit growth are on the upswing. Investors moved $65 billion into world stock mutual funds and exchange-traded funds through the first four months of the year, according to the Investment Company Institute. The U.S. recovery is further along than in Europe and elsewhere, which means those other areas may have more room to rise.
Oil Prices Steady, For Now
Oil prices have steadied, after rising production in the U.S., Libya and Nigeria over the past month, which has “taken the edge off” an OPEC-led initiative to cut production. Brent crude futures were trading 9 cents higher at $47.46 per barrel. U.S. West Texas Intermediate (WTI) crude futures were 7 cents higher at $44.81 per barrel. Both benchmarks are down 13% since late May, when oil producers extended a pledge to cut output. Analysts said a steady rise in U.S. production, along with output increases in Libya and Nigeria, were undermining the OPEC-led effort. There are also indicators that demand in Asia is slowing.