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Pollack: Consistent upward march

Posted by   /  November 7, 2017  /  No Comments

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November 6th, 2017

The Monday Morning Quarterback

A quick analysis of important economic data released over the last week

This week’s data was dominated by the monthly jobs report and its indications for the health of the economy. The U.S. added 261,000 jobs in October and another 90,000 jobs were added via revisions to previous monthly reports. While job growth for the month was actually below expectations and there was a slight dip in labor force participation contributing to the numbers, it was enough to drop the unemployment rate to 4.1% which is considered to be approaching full employment. Business productivity and disposable income are also on the rise.

With this consistent upward march in employment, income, and overall economic conditions comes confidence. Businesses are encouraged to invest and add employees to their payrolls. Consumers are also increasingly more confident and are opening their wallets. This has a ripple effects of its own throughout the economy. It should also be noted that the Fed is also likely more confident with the recent improvements and is expected to approve a rate hike by the end of the year. Overall, we are still heading in the right direction and it should continue into 2018.

U.S. Snapshot:

  • Total initial claims decreased even as claims in Puerto Rico are rising. Initial claims are currently 12.3% lower than a year ago.

  • Total nonfarm employment increased by 261,000 jobs over September while the unemployment rate decreased 0.1 percentage points to 4.1 percent in October. The largest net growth contributor to employment was business services, followed by health services as well as leisure and hospitality. The only decline took place within the information sector. Also, figures for August and September were revised upward and were 90,000 higher than the previous estimates. The three month average employment increase is now 162,000.

  • ADP Research Institute’s National Employment Report published an increase in total private employment of 235,000 jobs over September. This is a bounce back from last month’s growth of 110,000.

  • Nonfarm business sector labor productivity had a quarterly increase of 3.0%. Output and hours worked increased 3.8% and 0.8%, respectively. Annually, productivity is up 1.5%.

  • Personal Income grew 0.4 percent from last August after a 0.2 percent increase last month.  Disposable personal income also rose 0.4 percent while personal consumption expenditure rose by 1.0 percent. This is a refreshing change of pace compared to the slow growth of 0.1% for both in August.

  • Consumer confidence levels showed a substantial jump to 125.9 and it is currently at its highest level since December 2000. By comparison, confidence increased from 100.8 recorded in October of last year and 120.6 from last month.

  • The seasonally adjusted annual rate for auto sales decreased from September’s very strong level of 18.5 million to 18.0 million. This month’s result topped estimates and is a strong signal for consumer spending.

  • The ISM’s manufacturing index declined 2.1 percentage points to 58.7 in October.  This is following a September level of 60.8 and a level of 52 in October of last year. The September number was a strong reading and the third highest level of the year.  Any reading or 50 or above suggests that the manufacturing sector is expanding.

  • The ISM’s non-manufacturing index increased 0.3 percentage points from September to 60.1 in October. This is higher than last year’s 54.6 and the highest reading this year. . . This is it the 94th month of growth for this indicator. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding.

  • Total construction spending grew by 2.0 percent compared to the same period last year and 0.3 percent from last month. There was a 3.1 percent increase in private construction since last year and a 1.6 percent decline in public construction.

  • Household formation continues to slow. It is especially slow for in renter-occupied housing were we have seen consecutive quarter of negative growth. The increased in occupied housing units was solely in owner-occupied housing units. The homeownership rate for U.S. increased for the second consecutive quarter from 63.7 to 63.9.

  • The S&P Case-Shiller Composite-20 City Home Price index rose 0.4 percent in August and currently stands 5.9 percent higher August 2016.

  • The U.S. goods and services deficit increased $0.7 billion to $43.5 billion in October. Imports are at $240.3 billion, exports are at 130.6 billion. The year-to-date deficit increased by $34.5 billion from the same period last year. The goods deficit is currently at $65.4 billion.

  • New orders for manufactured goods increased $6.5 billion in September following increases in three of the four months prior. The inventories to shipments ratio remained unchanged from the 1.38 reported in August.

Arizona Snapshot:

  • Total air traffic at Sky Harbor international Airport was down 0.6 percent in the month of September when compared to same period last year. Enplanements decreased by 0.2 percent while deplanements decreased 1.0 percent.

  • The Arizona Homeownership Rate grew from last year’s level of 62.1 percent to 64.9 in the third quarter of 2017. Greater Phoenix saw an increase to 64.1 from 62.2 and Greater Tucson saw a decline from 60.9 to 57.3.

  • Arizona Rental Vacancy rates decreased from 10.3 percent in the second quarter 2017 to 8.5 percent in the third quarter. Homeowner Vacancy Rate declined from 2.5 percent to 2.1 percent in the third quarter of 2017.

  • The Case-Shiller Home Price index for Greater Phoenix continued to rise. The index grew 5.8 percent higher than the same period last year.

About EDPCo

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.  

For more information, contact –

Elliott D. Pollack & company
7505 East Sixth Avenue, Suite 100
Scottsdale, Arizona 85251

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