The Monday Morning Quarterback, a quick analysis of important economic data released over the past week
Elliott D. Pollack & Co.
Arizona Snapshot:
While weekly unemployment claims increased for the week ending June 8th, they are still down considerably from a year ago. Both Arizona and Maricopa County retail sales continued to grow. For Greater Phoenix, single-family listings continued to decline while sales were up. This combination of supply and demand continues to result in substantially higher prices for both new and existing single-family homes. Even normal resales were up at a double-digit clip over a year ago.
U.S. Snapshot
Initial claims for unemployment insurance declined. The trend shows improvement. Retail sales were up more rapidly than income. Auto sales continued to provide much of the gains. Consumer sentiment, while slightly down from May, remained at a high level in June relative to the last few years. Total inventories for manufacturing and trade grew more rapidly than did manufacturing and trade sales. The inventories/sales ratio increased only slightly in May, though. Industrial production was unchanged in May and capacity utilization declined slightly. Capacity utilization remains well below its long run average. This will push out demand for new plant spending.
Arizona
While Arizona weekly unemployment claims increased for the week ending June 8th, they were still down almost 40% from year earlier levels. The increase last week appears to be an aberration in the continued downtrend in claims. Retail sales were up for both the state as a whole and Greater Phoenix. For the state, while retail sales were up only 3.4% over year earlier levels in April, this growth accounts for a one-time adjustment between tax categories made by the Department of Revenue. For Greater Phoenix, retail sales were up a rapid 7.2% over April 2012 after an impressive 8.9% gain in March. Autos continue to lead the way.
For May, the Multiple Listing Service reports that total listings were down 2.1% from a year ago while total sales were up 11.8%. A good sign for the market as a whole is that normal resales were up by more than 72% over year earlier levels. Thus, a higher percentage of sales are now from non-distressed properties. According to ASU, demand is higher for luxury homes and while substantially higher prices for lower end homes have caused buyer interest to ease a little, multiple bid situations continue to be the norm for a large percentage of resales. Of the active listings in MLS, over 23% already have a signed contract, typically waiting for the lender’s short sale approval or some other contingency before they stop seeking backup offers. As a result of the current supply/demand situation, home prices continue to increase. The median price of new homes sold increased 30.0% between April 2012 and April 2013. Normal resales were up 15.0% while all sales were up 29.6%. On a price per square foot basis, new homes were up 16.9%, normal resales were up 7.9% and all sales were up 23.5% over the last year as of April. This indicates that buyers are gravitating to larger homes.
National
Initial claims for unemployment insurance dropped more than expected for the week of June 8 and now stand 12.6% below year earlier levels. This is the best year-over-year performance in quite some time. Retail and food sales were up 0.6% on a month over month basis (seasonally adjusted) and now stand 4.3% above year earlier levels. This is a healthy increase and reflects continued demand for autos and light trucks. The University of Michigan consumer sentiment study for June shows a level of 82.7 after a strong 84.5 in May. Even after the drop, sentiment is still much stronger than it was at the start of the year (73.8). Stronger income growth, though, is needed to improve consumption growth.
Manufacturing and trade sales were up 1.5% in April while inventories were up 4.2%. This is not a problem as long at the ratio of the two remains at normal levels. In April, the ratio increased slightly to 1.31 from 1.3 last month. A year ago, the ratio stood at 1.27. Industrial production was unchanged in May after having decreased 0.4% in April. It now stands about 1.6% above a year ago. The rate of capacity utilization for total industry edged down 0.1 percentage points to 77.6% in May, a rate 0.2 percentage points below its level a year earlier and 2.6 percentage points below its long run (1972-2012) average.
