ELLIOTT D. POLLACK
FOR IMMEDIATE RELEASE
October 10th, 2017
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
The impact of Hurricanes Irma and Harvey, as we discussed a couple of weeks ago, is showing up in the September data. It will continue to affect economic information in October and, in many cases, beyond. The good news is that the hurricanes occurred at a time when the economy was relatively strong, so the slowdown in the data should not be confused with an underlying weakness in the overall economy. For example, the sharp employment decline just reported was in food services and drinking places and the below trend growth in some other industries are clearly a result of Irma and Harvey. On the other hand, the data related to the unemployment rate, according to the Bureau of Labor, had no discernible effect on the national unemployment rate.
Other information released last week, such as the ISM’s manufacturing and non-manufacturing indices, were not affected. Other data, such as new auto and light truck sales were positively affected as a result of a substantial surge in replacement demand following the Hurricane induced flood in Houston in late August.
Overall, it appears that the economy continues to move forward despite hurricane induced aberrations in certain data.
The unemployment rate declined to 4.2% in September. This compares to 4.4% in August and 4.9% in September 2016 (see chart below).
Total nonfarm payroll employment changed little (-33,000) compared to last month. Hurricane Irma made landfall in Florida on September 10. This was during the reference period for employment surveys. Hurricane Harvey made landfall in Texas on August 25. While this was prior to the September reference period, it resulted in severe damage in Texas and other areas of the Gulf Coast. This did affect the September numbers.
The ISM’s manufacturing index expanded in September to 60.8. This compares to the August reading of 58.8 and the September 2016 reading of 51.7. Any reading or 50 or above suggests that the manufacturing sector is expanding. The September number was a strong reading.
The ISM’s non-manufacturing index rose to 59.8 in September. This compares to 55.3 in August and 56.6 a year ago. Any reading of 50 or above suggests expansion in the non-manufacturing sector.
Consumer credit continues to expand in August. It rose at a lower than expected rate. However, there was a sharp gain for revolving credit (credit cards). Revolving credit increased at a 7.0% annual rate in August and now stands 5.4% above a year ago. Non-revolving credit rose at a 3.2% annual rate in August and now stands 5.5% over year earlier levels. This suggests that consumers are becoming more willing to use their credit cards than they had been earlier in the cycle. This bears watching.
In the strongest monthly sales performance in 12 years, unit vehicle sales shot up to a hurricane fueled 18.5 million (at an annual rate) in September. This compares to a hurricane depressed 16.0 million (at an annual rate) in August. September’s rate points squarely at replacement demand following Hurricane Harvey’s flooding of Houston just as the weak August rate pointed to the initial negative effects of the hurricane.
Active listings in the Greater Phoenix MLS continue to slowly decline. They now stand at 21,694 compared to 23,791 a year ago. This suggests continued supply limitations in the local market. Not surprisingly, days on market for resale homes continued to decline. In September, it was 65.2 days compared to 65.4 last month and 72.1 a year ago.
Elliott D. Pollack & Company (EDPCo) offers a broad range of economic and real estate consulting services backed by one of the most comprehensive databases found in the nation. This information makes it possible for the firm to conduct economic forecasting, develop economic impact studies and prepare demographic analyses and forecasts. Econometric modeling and economic development analysis and planning are also part of our capabilities. EDPCo staff includes professionals with backgrounds in economics, urban planning, financial analysis, real estate development and government. These professionals serve a broad client base of both public and private sector entities that range from school districts and utility companies to law firms and real estate developers.
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