The Monday Morning Quarterback : A quick analysis of important economic data released over the past week
Arizona Snapshot:
Median home prices continue to increase and the housing recovery is positively impacting the local employment figures. The recent rates of growth may not continue at the same pace, but overall appreciation in home values will indeed continue as will new job opportunities.
U.S. Snapshot
Total nonfarm employment grew by 175,000 jobs in May, but the unemployment rate increased slightly, from 7.5% to 7.6%. Last year at this time, the unemployment rate was 8.2%. The year before, it was 9.0%. We need to keep things in perspective.
Arizona
It was a slow week for local economic data. According to The Cromford Report, the median price of single-family homes (new and resale) increased in May. In Greater Phoenix this figure grew by 1.7% and was 20.7% above the same time last year. Expect these rates of growth to slow during the next couple of years. However, appreciation at above trend rates should continue. In terms of multi-family activity
in the same area, Hendricks & Partners reports vacancy rates as low as 5.4% in the first quarter of 2013. The vacancy rate was 6.8% a year ago. Absorptions continue to exceed completions, thus the vacancy rate should continue to be low for a while.
As mentioned in previous updates, the rebound in the local housing market has led to a rebound in the local employment figures. In the longer term a number of issues need to be worked out. However, the most likely scenario in the near term is for relatively strong activity.
National
The data from this past week was generally positive. For May, 175,000 new jobs were created but the unemployment rate increased slightly to 7.6%. The job count figure is a better indicator of economic growth than the unemployment rate at this stage of the recovery. While the number is improving, look for it to consistently exceed 200,000 before getting too excited. The Institute for Supply Management reported a slight contraction in manufacturing activity in May. The index fell from 50.7% to 49.0%. A reading below 50.0% indicates contraction. This should be a temporary condition.
Motor vehicle sales increased by 2.5% in May compared to April, and were 9.3% above the same time last year. U.S. construction spending was also up by a modest 0.4% compared to last month and was up 4.3% compared to last year. Broken down further, private construction was up 1.0% compared to last month 9.0% compared to last year. Public construction was down 5.1% from last year. For the most part, economic activity in May was as expected.
