Elliott D. Pollack & Co.
The Index of Leading Indicators declined again in August. This is the third decline in the past six months. Yet, while the six-month growth rate has slowed substantially, it still remains in growth territory mainly due to positive contributions from financial components such as stock prices, yield spread and the Leading Credit Index. Over the past several months, the index seems to be fluctuating around a flat trend. This is far from a good sign given where we stand in the business cycle.
Initial claims for unemployment insurance continue to be flat. In other words, there has been virtually no improvement in quite a while. Both the weekly figure and the 4-week moving average are higher than a month ago.
Virtually all the good news last week came in the housing sector. Housing starts, while below expectations, were at a 750,000 annual rate. This is up 29% from a year ago and 2.3% from last month. Single-family starts were up 27% from a year ago and 6.6% from last month. Existing home sales in the U.S. were up 9.3% from a year ago and 7.8% from last month. Median prices were up 9.6% from last year. Increasing housing prices at this point are a positive. Not only does it mean that fewer homeowners will be under water (more debt than value), but it will allow more owners to sell their homes and become more mobile. It will also help create a positive wealth effect.
As for Arizona and Greater Phoenix, the news continues to be moderately positive. For the state as a whole, total nonfarm employment was up in August. Gains were wide spread. Only “Other Services” declined. Jobs were up 2.3% from year earlier levels and 2.0% for the first 8 months of the year. The state gained 54,950 jobs over the year. Greater Phoenix was up 2.8% from year earlier levels and 2.4% for the first 8 months of 2012. Thus, Greater Phoenix gained 47,550 jobs over the past year or almost 87% of all the jobs created in the state.
R.L. Brown reported that 1,062 single-family permits were issued in August. This is 53% higher than a year ago. Thus, the new single-family market continues to recover. New home permits in Southern Arizona were up a more modest 33.5%. But, the trends in Greater Tucson continue to move in the right direction (permits are up, median prices are up slightly, and foreclosures are down).
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