Pollack: Not a bad economic picture




& Company


July 9th, 2018

The Monday Morning Quarterback

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

Once again, the bulk of the economic news was good.  But, once again, the focus was on the chances of a trade war.  President Trump is now following through on his campaign promise to address the imbalance in international trade.  Since he has been talking about the issue since before his election, this should be no surprise.  He views the large trade deficit as displacing jobs overseas that would otherwise be in the U.S.  He is also concerned about the theft of American technology by the Chinese.

Now that the realities are setting in, markets will get even more nervous.  While the odds are that this will still turn out to be a trade skirmish and not a trade war, the odds are shifting.  This would be a real problem for the Chinese who would be most affected.  That might cause them to escalate the situation and even go as far as to devalue their currency and sell part of their massive holdings of U.S. treasuries.  Only time will tell, but, don’t overreact just yet.

As for the current economic situation, the news continues to be good.  The economy added 213,000 new jobs in June.  And the increase in the unemployment rate was due to more people entering the labor force as opposed to a slowdown in job formation.  And wages remained under control.  In addition, the manufacturing and non-manufacturing sectors remain strong and construction were up.

Not a bad picture.  Let’s see how things play out.

U.S. Snapshot:

  • Nonfarm payroll employment increased by 213,000 in June and has grown 2.4 million over the past year.  Over the month, the biggest areas of increase were education and health services (54,000), professional and business services (50,000), manufacturing (36,000), and construction (13,000).  Retail lost 21,600 jobs.  Upward revisions in April and May increased employment gains in those two months by a total of 37,000 more than the gains previously reported.

  • The unemployment rate increased from 3.8% to 4.0% because the labor force grew faster than the increase in jobs.  This was due to an increase in the participation rate as many of those who had left the labor force reentered.  Whether this is a trend or not remains to be seen.

  • In June, average hourly earnings for all employees on private nonfarm payrolls now stand 2.7% above year earlier levels.  This indicates that despite the low level of unemployment, there does not appear to be significant upward pressure on wages.

  • The ISM’s manufacturing index as of June stands at 60.2.  This is a 1.5 percentage point gain over May.  This indicates growth in manufacturing for the 22nd consecutive month.  This is the highest level of the index since February.  Any reading of above 50 indicates expansion in manufacturing.

  • The ISM’s nonmanufacturing index stood at 59.1 in June compared to 58.6 in May and 57.2 a year ago. This is the 101st consecutive month of expansion in the nonmanufacturing sector. Again, any reading above 50 indicates expansion in the sector.

  • Manufacturers’ new orders increased 0.4% in May over April and now stand a very strong 9.2% above year earlier levels.  Durable goods orders were also fell 0.4% in May and stand 9.4% above year earlier


  • Light vehicle sales were at a seasonally adjusted 17.4 million at an annual rate in June.  This compares to 16.8 in May and 16.6 a year ago.

  • Construction spending during May increased 0.4% over April and now stands 4.5% over a year ago.  Both private and public sector spending on construction were up.

Arizona Snapshot:

  • Active listings in the Greater Phoenix MLS continue to decline.  Active listings in June were 20,920.  That’s down from 21,762 in May and 23,178 a year ago.  Average days on market also continue to decline.  In June it was 60.7 days compared to 61.7 days in May and 66.6 days a year ago.  The market for housing continues to tighten.

  • As a result of the tight housing market, the median sales price of an existing single family home in Greater Phoenix increased to $267,329 in June.  That’s a 9.1% gain over the past year.

  • In Maricopa County, the median price of new homes as a percent of the median price of a resale home decreased to 125.3% from 134.7% a month ago and 133.9% a year ago (see chart below).

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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