The Monday Morning Quarterback /A quick analysis of important economic data released over the past week
By Elliott D. Pollack & Co.
Good news at a good time. Strong employment growth and lower gas prices should free up more income just in time for the Christmas retail season. No matter how modest or strong the season turns out to be, it will be stronger than it otherwise would have been. Most other economic news was good as well. The economy is not moving forward on all cylinders, but, it is on most of them. Construction remains very weak (especially single family housing) and business spending on plant is not yet booming. Yet, things look as good as they probably will in this cycle. As was stated at the ASU forecast luncheon last week, we are probably only in the 5th inning of the up cycle.
Arizona Snapshot
Unemployment claims continued to decline through November. Total weekly claims are down 41.1% from a year ago.
Retail sales in Arizona were up 0.8% in October and were up 7.5% from a year earlier. In Maricopa County, the increase was 0.3% for the month and 7.8% from a year ago.
According to the Cromford Report, active listing in the Greater Phoenix MLS were up 3.6% from a year ago while single family resales were down 2.4%.
According to the Wilcox report, the number of distressed properties in Greater Phoenix was 1,483. This is down 31.0% from last year and down about 90.0% from the October peak of 14,889 in October 2009.
U.S. Snapshot
U.S. employers ramped up hiring last month, continuing a stretch of robust payroll gains and keeping the economy on track to record its strongest year of job creation in 15 years. The surprise is not that the year was so strong, but, why, given the extent of the downturn in employment during the great recession, it took so long for strong employment growth to reappear. Nonfarm payrolls rose a seasonally adjusted 321,000 last month. Expectations were for a less robust 230,000 jobs.
The unemployment rate stayed steady at 5.8% last month.
Nonfarm productivity growth for the third quarter was revised up to an annualized 2.3% from the first estimate of 2.0% and following a 2.8% boost in the second quarter. Unit labor costs, a proxy for pressure on wages, were revised downward to a minus 1.0% from the first estimate of up 0.3% after falling 3.7% in the second quarter. Thus, wage pressures from labor costs seems to be virtually nonexistent at this point in the cycle.
Factory orders in October surprised somewhat on the downside but with weakness coming from nondurables-almost certainly from lower oil prices. Durable goods orders were up 0.3% for the month and 5.5% over a year ago.
Economic activity in the manufacturing sector expanded in November for the 18th consecutive month, and the overall economy grew for the 66th consecutive month according to the ISM Manufacturing Index. The index was at 58.7 in November compared to 59 in October. Any reading of 50 or more indicates expansion.
Consumer credit rose $13.2 billion (0.4%) in October. But, once again, to the disappointment of retailers, the gain was centered in non-revolving credit which rose $12.3 billion (0.5%) on the usual mix between auto financing and the government’s acquisition of student loans from private lenders. Revolving credit rose only $0.9 billion (0.1%) in the month.
Automakers in the U.S. beat the Black Friday blahs that hit other retailers, racking up strong sales of light trucks and cars. U.S. motor vehicle sales totaled 17.1 million in November compared to 16.3 million in October.
