The Monday Morning Quarterback: A quick analysis of important economic data released over the last week
By Elliott D. Pollack & Co.
Arizona Snapshot:
The housing market in Greater Phoenix continues to do well. While total resales are modestly down, normal (non-distressed) resales are way up. New housing continues to show improvement. Both new and existing home prices continue to rise. Both statewide and Greater Phoenix lodging data for March modestly lagged year earlier performance. Weekly unemployment claims continue to show reasonable numbers versus a year ago.
U.S. Snapshot
Nonfarm employment growth was soft in March but still beat expectations. The unemployment rate continues to fall. Initial claims for unemployment insurance showed progress. Consumer confidence was up as was personal income and disposable personal income. The saving rate declined. As for manufacturing, new orders declined in March as did the ISM’s manufacturing index. The index still showed that manufacturing was still growing modestly. So did the ISM non-manufacturing index. April motor vehicle sales were up from a year ago but the rate of growth has been slowing. Housing and private construction trends remain positive.
Arizona
Greater Phoenix housing continues to be a good news story. While total resales were down 8.0% in March vs. a year ago, normal (non-distressed) resales were up 66.9%. This is evidence that the market is normalizing as the number of distressed properties continues to decline. New housing was also way up. New home sales in March totaled 949. While this is still modest by pre-recession standards, it was a 36.9% gain over a year ago. Gilbert is still out in front of the pack in terms of new home sales. Other cities doing well include Goodyear, Phoenix, Peoria, Mesa, San Tan Valley, Buckeye, Queen Creek, Chandler and Surprise. Median prices for all sales were up 29.7% in March vs. March 2012. New home sales prices were up 22.0%. Normal resale prices were up 12.6%. HUD median sales prices were up over 52%. With median prices up more than prices per square foot, it appears that people are gravitating toward larger homes.
March lodging data was disappointing. Occupancy statewide was down to 73.8% compared to 74.9% a year ago. In Greater Phoenix, the numbers were 82.8% and 85.6% respectively. This was due to a drop in demand and a slight drop in supply.
Arizona weekly unemployment insurance claims were down 39.9% from a year ago. This percentage decline has been fairly constant over the past several months. This shows that the momentum towards improvement is continuing.
National
It was a big week for investors. The better than expected news on employment helped drive the stock market to record highs. While still soft, the better than expected numbers combined with revised February and March figures indicated that the economy, at least in the second quarter, will not be hit as hard by the sequestration as originally thought. This, combined with the continued decline in the unemployment rate to 7.5%, was good news. Other good news, at least in relative terms, was the continued decline in the initial claims for unemployment insurance. As of March 30, initial claims were 5.4% higher than a year ago. As of April 27, they were 12.7% below a year ago.
Consumer confidence, as measured by the Conference Board, increased to 68.1 in April from 61.9 in March. This, combined with continued growth in personal income (up 0.2% for the month), disposable personal income (also up 0.2% for the month) and personal consumption expenditures (you guessed it, up 0.2% for the month) was good news in the face of the ending of the withholding tax holiday. Many thought the higher taxes would result in lower spending.
U.S. manufacturers’ new orders were down in March and are 0.3% below a year ago. And even though the Institute for Supply Management Manufacturing Index was down for April (50.7 vs. 51.3 in March and 54.1 a year ago), any reading of above 50 indicates that the manufacturing sector is growing. The ISM non-manufacturing index was also lower in April (53.1) but also remains above 50, indicating a continued slow expansion.
Vehicle sales slowed slightly in April but were still up from a year ago. Total auto and light truck sales came in at an annual rate of 14.9 million, down 2.2 percent from the 15.2 million reported in March. This is the lowest rate since October, 2012.
Finally, national housing prices in February (the latest data reported) were up 9.3% over a year ago. This should help not only those underwater in their homes, but, any home owner who now probably feels better about the equity in their home. Also, the National Association of Realtors pending home sales index was 105.7 in March, up from 104.1 in February and 98.8 a year ago.
