The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
By Elliott D. Pollack and Co.
It was a positive week across the board for economic news. And there is now clear evidence that, as was hoped and expected, the slowdown in the 1st quarter was caused by temporary events and that there would be a 2nd quarter rebound. The bounce should continue. This doesn’t mean that the basic trend of a subpar expansion has changed. It means that at least it’s not worse than that and the expansion should continue.
Arizona Snapshot:
- According to the Home Builders Association of Central Arizona (Greater Phoenix), single family building permits in April were up to 1,505. That’s up 40.7 percent from last April’s 1,070. Year-to-date, single family permits in Greater Phoenix are up 22.3 percent. This is a clear indication that the new housing market in Great Phoenix is finally gaining traction. Hopefully, this will continue.
- The market for existing housing in greater Phoenix is also improving. Active listings continue to decline (26,810 in April vs. 27,553 in March). Resales continue to grow (8,373 vs. 7,887). And prices are increasing ($202,000 in April vs. $200,000 in March and $190,000 a year ago).
U.S. Snapshot:
- Nonfarm employment grew by a seasonally adjusted 223,000 in April, right in line with expectations. Hiring had slowed sharply in March. It was first reported as 126,000 new jobs. That was revised to 85,000. It is now clear that the poor jobs report in March was a weather, oil price, port slowdown and strong dollar induced aberration. Payrolls grew nicely in professional and business services, health care and, positively, in construction. The mining sector, which includes energy industries, fell by 15,000.
- The unemployment rate, drawn from a separate survey of households, fell to 5.4 percent in April from 5.5 percent in March. As can be seen in the chart below, this is the lowest level in almost 7 years. The rate is moving toward the Fed’s definition of full employment that is between 5-5.2 percent. It is likely that the lower unemployment rate will draw workers back into the labor force.
- The consensus forecast of U.S. GDP fell as panelists reflected the economy’s weaker than anticipated 1st quarter performance. Expectations are now for real GDP to grow 2.5 percent this year and 2.8 percent next.
- Manufacturers’ new orders rose 2.1 percent in March. This ended 7 straight months of decline. The sector got a big boost from civilian aircraft.
- The ISM non-manufacturing index extended its strong and unusually stable trend, coming in at 57.8 for April vs. 56.5 in March. Any reading above 50 indicates expansion.
