ELLIOTT D. POLLACK & Company
FOR IMMEDIATE RELEASE
May 9th, 2016
The Monday Morning Quarterback
A quick analysis of important economic data released over the past week
The economic data released last week was mixed but mostly positive. The growth in employment for April was a disappointment compared to the trend of the last 12 months and bears watching. Labor force participation also dipped slightly, reversing gains from prior months. However, credit card spending and motor vehicle sales were up significantly, which points to both improved consumer confidence and strength in the labor market. Also, manufacturing has expanded for the second consecutive month.
Here locally, home sales and prices are still growing compared to last year. New home sales volumes dipped from last month but are still nearly 50% higher than just one year ago. Increased home equity is a real positive for existing homeowners.
U.S. Snapshot:
- Total nonfarm payroll employment increased by 160,000 in April. This represents 1.9% growth compared to last year. Employment gains occurred in health care, professional and business services, and financial activities. Job losses continued in mining.
- The unemployment rate remained unchanged at 5.0%. The rate still compares favorably to the same month last year when the unemployment rate was 5.4% . The recent uptick in the labor force participation was modestly neutralized with a decline in April to 62.8%.
- Nonfarm business sector labor productivity declined at a 1.0% annual rate during the 1st quarter and now stands a modest 0.6% above a year ago. Unit labor costs in the nonfarm business sector increased 4.1% in the 1st quarter and are now 2.3% above a year ago. Labor cost increases resulted from a combination of a 3.0% increase in hourly compensation and a 1.0% decrease in productivity.
- The ISM manufacturing index decreased in April to 50.8 from 51.8 in March. However, any reading above 50 suggests that the manufacturing sector is expanding. This is the second consecutive month of expansion. Also, the ISM non-manufacturing index was at 55.7 compared to 54.5 in March. This suggests that the larger non-manufacturing sector is still expanding.
- New orders for manufactured goods in March, which has been up two of the last three months, increased 1.1%. Total orders are down 4.2% from a year ago and durable goods orders are down 2.6% from a year ago. Also, inventories are down year over year and the inventory/sales ratio in manufacturing is unchanged from February.
- Consumers used their credit cards more as revolving credit rose at a 10.0% annual rate in March. Revolving credit now stands 6.2% above a year ago. Non-revolving credit (primarily auto and student loans) were up to an 8.5% annual rate in March and are 6.8% above a year ago.
- Motor vehicle sales rose drastically in April at a 17.3 million unit pace, representing a 5.2% increase over March.
- Construction spending in March was up 0.3% from February and now stands 8.0% above a year ago. Private residential construction was up 7.8% over last year.
Arizona Snapshot:
- Arizona’s unemployment claims are 5.0% lower than last year.
- Single family sales in Maricopa County are up slightly in the month of April, created by a combination of sales growth in resale homes but declines in new home sales. Year over year sales are still very impressive for new homes, reporting 49.1% higher than last April. Resales are reported at 4.5% higher than one year ago.
- Median prices are still on the rise ($230,000) and are now 8.2% above a year ago. The median single family home price of new homes in April was $312,718 (2.2% increase) while the median resale home in April was $220,000 (7.3% increase).
- Foreclosures in Maricopa County continue to fall. In all categories of distress (notices of foreclosure, foreclosure, REO properties and distressed properties), the county is reporting 22%-36% declines, which is a very positive sign.
