Pollack: A lot going on




February 10, 2020The Monday Morning Quarterback

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

It was quite a week politically.  President Trump was acquitted on the charges related to his impeachment, the Iowa caucus turned into a technology issue, and a State of the Union message that was a visual spectacle. 

On top of that, both the infection rate and death count from the Coronavirus continued to climb as the medical world continued to galvanize in the fight against this killer.  These events put last week’s economic news into perspective. 

The news, though, was good.  The U.S. created an unexpectedly high number of new jobs.  The labor force continues to expand more rapidly than anticipated.  The manufacturing sector rebounded for the first time in six months.  This is true despite the mixed results for durable goods spending.  In addition, the non-manufacturing sector continued to expand.  Consumers speeded up the use of their credit cards.  And, construction spending on an annual basis continued to look good.  

Locally, the Greater Phoenix housing market continued to flourish and retail sales in the state and in Greater Phoenix continued to expand at a more moderate, yet still favorable, rate.  Overall, it was a week that had a lot going on.

U.S. Snapshot:

The U.S created 225,000 jobs in January. These were very good numbers and compare to expectations of 165,000 jobs for the month. Notable job gains occurred in construction, health care, leisure and hospitality and the trade, transportation and utilities sector. The unemployment rate rose modestly to 3.6% from 3.5% in December. It was down from a year ago when the unemployment rate was 4.0%. This occurred because of rapid growth in the labor force as people who had left the work force continue to reenter. The labor force participation rate is now the highest since 2013.

In January, average hourly earnings for all employees on private sector payrolls rose to $28.44.  This is a gain of 3.1% from year earlier levels.

According to the ISM’s manufacturing index, manufacturing in the U.S. expanded in January.  This was the first month of expansion in six months.  The index rose to 50.9 in January from 47.8 in December.  Any reading above 50 indicates expansion in this sector.

The ISM’s non-manufacturing index continued to expand in January and reached 55.5 compared to 54.9.  This is the 120th consecutive month of expansion in the non-manufacturing sector.  Any reading above 50 indicates expansion in the sector.  Any reading below 50 indicates contraction.

Nonfarm business sector labor productivity increase 1.4% in the 4th quarter of 2019.  Output increased 2.5% and hours worked increased by 1.1%.  Over the last year, productivity has increased by 1.8% as output grew by 2.7% and hours worked grew by 0.9%. 

Unit labor costs grew at a 1.4% annual rate in the 4th quarter of 2019 and now stand 2.4% above year earlier levels.  Unit labor costs have grown progressively more rapidly over year earlier levels each quarter of 2019.  Ultimately, this results in upward pressure for wages.

Consumer credit grew at an annual rate of 6.3% in December and now stands 4.7% over a year ago.  The big increase was in revolving credit (credit cards) which grew at a 14.0% annualized clip in December.  This will most likely not be repeated over the next few months.  Revolving credit is up 4.2% over year earlier levels.  Non-revolving credit (mainly auto and student loans) grew at a 3.7% annual rate in the quarter and were 4.8% above year earlier levels.

New orders for manufactured goods in December, up two of the last three months, were up 1.8% from November.  Durable goods orders were up 2.4% for the month but remain 3.6% below year earlier levels.  Non-defense goods excluding aircraft were slightly down for the month and up 1.0% over a year ago.

Total construction spending was down slightly (0.2%) in December when compared to November but stands 5.0% above year earlier levels.  Private sector construction was up 2.9% from a year ago and public sector construction was up 11.5% from last December.

Arizona Snapshot:

According to the Information Market, residential sales in Maricopa County were up 14.8% in January 2020 when compared to January 2019.  That’s 7,922 units vs. 6,898 units.  Resales accounted for 6,768 of the sales in January of 2020 compared to 5,954 in January of 2019.  Median resale prices were up 10.1% over that period to $285,000.  New build sales rose to 1,154 vs. 944.  New median sales prices rose 6.7% to $365,706.

Retail sales in November of 2019 increased 3.5% from year earlier levels in the state.  In Maricopa County, retail sales also grew at 3.5% over that period.

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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February 2020