Collins
by Mike Collins
April 14th, 2014

Analyzing the Data

There are enough government and private agencies reporting key economic data that a new release comes out every few days. It can be difficult to form an accurate picture because the myriad data out there seldom point in the same direction at the same time. While this is a source of frustration for door and window manufacturers who are trying to create projections and investment plans for the future, it is an unavoidable aspect of our economy.

So, given all of the data that is available, which stats deserve the most attention? Housing starts are an obvious choice for companies that sell into the new construction market. Don’t overlook existing home sales, though, which are an important factor in remodeling activity. Most homeowners like to remodel an existing home that they’ve bought within the first few years of owning it. Each additional existing home that is sold is a potential customer lining up to purchase doors and windows to remodel their home. With the National Association of Home Builders reporting that there were roughly 14 million existing homes sold between 2011 and 2013—that’s a lot of potential customers.

Employment figures are another key data point that deserves attention. However, construction payrolls have come to be a widely reported, and likely misunderstood, aspect of the overall employment data. When construction payroll figures are released each month, they tend to be reported in the media as if they reflect a positive or negative change in the industry that is happening right now. Comparing Bureau of Labor Statistic and Census Bureau data, however, Bank of America recently determined that construction payrolls lag housing starts by five quarters. This means that the construction payroll numbers released this month are an echo of events from more than a year ago. Not the most useful statistic in determining whether to invest in that new machine next month.

The more important aspect of employment data is the monthly total employment report. Specifically, we should compare the number of jobs created each month with the 200,000 job creation level that is thought to indicate a self-sustaining recovery in the U.S. economy. In recent months, we’ve flirted with and even exceeded that level, but not consistently. In March, for example, the economy added 192,000 jobs. That puts us 8,000 short of the goal, but it’s a step in the right direction.

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