ELLIOTT D. POLLACK & Company
FOR IMMEDIATE RELEASE
December 7th, 2015
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
It was a good week for the economy. Unemployment insurance claims are near historic lows and employment across the country continues to improve. In addition the unemployment rate remained at 5.0%.
Construction spending remains a bright spot when comparing it to just one year ago. Both public and private spending showed gains in spending. Employment in construction grew by 46,000 workers in November alone and by 259,000 over the past year.
In addition, new vehicle sales data strongly confirmed the strength of the consumer. And while the ISM manufacturing index showed the manufacturing sector contracting slightly, manufacturers’ new orders increased month over month.
U.S. Snapshot:
- Total nonfarm payroll employment increased by 211,000 in November and the unemployment rate remained at 5.0%. There were job gains in construction, professional and technical services, and health care. Both mining and information lost jobs. Employment growth over the past year was 1.9%. (See chart below)
- Regarding the labor market, Mark Zandi, chief economist of Moody’s Analytics, noted, “Job growth remains strong and steady. The current pace of job creation is twice that needed to absorb growth in the working age population. The economy is fast approaching full employment and will be there no later than next summer.”
- Construction spending for October was 13% above the October 2014 estimate. Private residential construction is up 16.6%, comprised of an 11.4% increase in single family construction and 27.9% increase in multi-family construction.
- Pending home sales grew slightly by 0.2%. This index has increased year over year for 14 consecutive months now. Demand is expected to remain stable through year end and the National Association of Realtors expects 2015 to yield 5.3 million sales, the highest volume since 2006.
- Productivity grew at an annualized rate of 2.2% in the third quarter. It now stands 0.6% above a year ago.
- Imports declined again in October, as did exports. The total trade balance increased 2.7% while the trade balance for goods only increased by 1.8% compared to a year ago.
- Manufacturers’ new orders increased 1.5% in October compared to September. This was welcome news after two consecutive months of decline. Orders now stand 4.5% below a year ago.
- With all of the recent slowdown in orders, the ISM’s manufacturing index indicated that the manufacturing sector contracted in November with a reading of 48.6 percent. This is the first contraction since November 2012.
- The ISM’s non-manufacturing index decreased to 55.9, down from 59.1 in October. This indicates that the nonmanufacturing sector is continuing to grow and represents the 70th consecutive month of growth.
- In November, vehicle sales remained unchanged at 18.1 million units (annualized). This is a 12 year high. November’s unit sales revealed a shift toward light trucks (possibly due to low gasoline prices).
Arizona Snapshot:
- According to the Cromford Report, the resale market in Greater Phoenix slowed in November month over month. While the number of listings grew 1.7% from October, resales were down 18.5% from October. However, sales are still up 5.8% from a year ago.
- Resale pricing has continued to appreciate and currently stands 9.6% above a year ago. New home prices have softened somewhat and stand 1.7% below last year.
- The significant spread between the median price and new home price of an existing home persisted in November. The prices were $307,561 for new homes and $207,700 for an existing home. That puts the ratio at 148.1 compared to the pre-2009 average of about 120. The peak was in 2011 when, due to the large numbers of foreclosures and short sales, the ratio reached 200.
