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Pollack: Brexit has caused interest rates to fall
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The Source for Information and Analysis on the Arizona Economy and Real Estate
EDP LogoELLIOTT D. POLLACK

& Company

FOR IMMEDIATE RELEASE
July 11th 2016
 
The Monday Morning Quarterback
A quick analysis of important economic data released over the past week
The economic news last week was good.  The best news that came out was that nonfarm payroll employment grew by 287,000 in June.  This was important since the jobs report in May was both terrible and unexpected.  Thus, it appears that May was an aberration and not the beginning of a trend.
There were other noteworthy numbers as well.  Of interest was the fact that Brexit has caused interest rates to fall.  The 30-year fixed rate mortgage averaged 3.41% compared to 3.60% a month ago and 4.04% a year ago.  This will help the single-family housing recovery that is so important to the direction of the national economy at this point.  In addition, consumers were reluctant to use their credit cards last month. While this is positive in the long run, in the short term, it isn’t a plus for consumer spending.
Overall, the economy continues to move slowly forward.
U.S. Snapshot:
  • As stated above, nonfarm payroll grew by 287,000 in June after changing little in May (+11,000).  Job growth occurred in leisure and hospitality, health care and social assistance, and financial activities.  Over the past year, the largest job gains have been in educational and health services, professional and business services, trade, transportation and utilities, leisure and hospitality and financial activities.  Only natural resources and mining have had sizable declines (-15.6%) mainly due to oil price declines.  Manufacturing has been flat.
  • Manufacturers’ new orders declined by 1.0% in May and now stand 1.2% below a year ago.  Durable goods orders, while down for the month, are up 3.0% from a year ago.  Manufacturers’ inventories are also down 3.0%.  Inventories have been down 12 of the past 13 months as producers try to keep inventories in line with orders.
  • The ISM’s non-manufacturing index increased to 56.5% in June.  This compares to 52.9% in May and 56.2% a year ago.  An index above 48.9% over a period of time indicates growth.  Thus, the June numbers indicate growth for the 83rd consecutive month in the overall economy.
  • Consumer spending posted a sizable gain in May as did consumer credit which rose at a 6.2% annual rate in May and now stands 6.3% above a year ago.  Revolving credit (mainly credit cards) rose by 3.0% at an annual rate while non-revolving credit (mainly auto and student loans) rose at a 7.3% annual rate.
Arizona Snapshot:
  • The June Arizona consumer confidence index, produced by Behavior Research Center, shows that Arizonans are more confident in the Arizona economy than at any time since 2007.   In addition, it shows that since January 2009, when the index bottomed out at 44.2, a seesaw, but very slow upward trend in confidence has been apparent in the state.  In June, the index rose to 88.4 compared to 80.0 in April.  This is the first time since July 2007 that the index has approached 90.  Residents of Maricopa County remain more optimistic than residents of Pima County.
  • Total air traffic at Sky Harbor was flat in May after a slight decline in April.  Overall, enplanements were up 0.4% over a year ago while deplanements were down 0.5%.
  • Total listing in Greater Phoenix numbered 24,898 in June.  This compares to 25,980 in May.  Months-supply fell slightly to 2.8 in June from 2.9 in May.  Listings also fell in Greater Tucson. June listings numbered 4,175 compared to 4,408 in May.
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