The Monday Morning Quarterback / A quick analysis of important economic data released over the past week
It was a good week for national economic data. For Arizona, it was just ok. The U.S. economy continues to expand at a rate as rapid as can be expected given the poor housing market. In Arizona, the recovery continues but we are still below the previous peak and it will be a while before the recovery (getting back to the previous peak) becomes an expansion. Overall, considering the condition of the housing market and the slow rate of migration, the state is doing about as well as can be expected.
U.S. Snapshot:
Initial claims for unemployment insurance dropped significantly last week and now are at levels not seen since 2007. This suggests a continued drop in the unemployment rate and should lead to an increase in the labor force participation rate.
Thanks to the stock market, housing price gains and continued reductions in debt, consumer net worth now stands 10.4% above year earlier levels and was up 1.7% for the quarter. This is good news and should help consumers feel better about spending.
Leading indicators continue to expand. They edged up 0.2% in August following an upwardly revised and very sharp gain of 1.1% in July. This suggests at least moderate growth through the balance of the year.
Consumer prices came in lower than expected last month. The CPI actually declined 0.2% and now stands only 1.7% above a year ago. Over 80% of the decline was due to energy.
Industrial production slipped 0.1% in August after a gain of 0.2% in July. The weakness was led by motor vehicles. Since motor vehicle sales have been healthy, the drop is probably just a retooling timing issue.
Capacity utilization eased to 78.8% from 79.1%.
While builder confidence in the market for newly built single-family homes rose for the fourth consecutive month in September, single-family housing starts actually fell in August. While single family starts rose 22.9% in July, they fell 14.4% in August. They now stand 8.0% over year earlier levels.
Arizona Snapshot:
Total claims for unemployment insurance were flat for the week but are 35.4% below year earlier levels suggesting that the unemployment rate will continue to slowly decline in the state. However, in August, the seasonally adjusted unemployment rate in Arizona edged up 1/10 of 1% from 7.0% in July to 7.1% in August. This is the third consecutive month of increase in the unemployment rate. A year ago, the Arizona unemployment rate was 8.1%. In contrast, the U.S. rate dropped 1/10 of 1% from 6.2% to 6.1% in August. A year ago, the U.S. rate was 7.2%.
Over the year, Arizona added 51,400 nonfarm jobs (2.1%). Of these gains, the private sector gained 50,500 jobs and the Government added 900 jobs. The table below shows where the gains were by industry. For the first eight months of the year, job growth now puts Arizona at 15th out of 50 states in gains. The state has now regained 62% of the jobs lost in the great recession.
Greater Phoenix job growth is up 2.2% year-to-date and 2.3% year over year and has added 42,200 jobs on a year over year basis. It has regained 70% of the jobs lost in the recession. The unemployment rate for the area stands at 6.3%.
Greater Tucson jobs are up only 1.2% on a year-to-date basis and 1.5% year over year with a gain of 5,200 jobs. The unemployment rate in Greater Tucson stands at 6.6%.
R.L. Brown reports that August single family permits were off a whopping 28.8% from last year. According to the R.L. Brown report, the August permit count of 838 new homes was the lowest count in the last 12 months. R.L. further reported that month over month comparative permits have been off for each of the last eight months. Year-to-date in 2014, 7,621 new home permits have been issued in the region. This is down 17.2% from the same period in 2013 when the region counted 9,206 permits. For further analysis, see R.L. Brown’s Phoenix market newsletter.
In Greater Tucson, permit levels were off 4.8% for the month in August and now stand 6.6% below last year on a year-to-date (first 8 months vs. first 8 months) basis.
