The Monday Morning Quarterback: A quick analysis of important economic data released over the last week
ELLIOTT D. POLLACK & Company
Arizona Snapshot: Arizona continues to improve; it is hard not to be optimistic about housing; and retail sales are up modestly. Greater Phoenix continues to do better than the rest of the state.
U.S. Snapshot: Data is mixed. Employment is up modestly, but, the labor force participation rate declined. Both consumer sentiment and construction are up.
Manufacturing is not improving.
Arizona
While weekly unemployment claims were up for the week of December 1st, they are down 38.1% from a year ago. This is a significant improvement. On the other hand, total TPT sales for October were up only 2.6% from a year ago. This can only be characterized as a disappointment. Only motor vehicle sales and clothing were up significantly. Greater Phoenix sales were up 2.9%.
Single-family home prices resumed their strong upward trend between September and October. The median sales price was up 34.4% from October 2011, increasing from $116,800 to $157,000. Overall supply (excluding homes already under contract) was down 14% at the start of November compared to year earlier levels. Distressed supply was down 52% over the same period. All categories of housing enjoyed price gains but the most significant gains remain in distressed properties. As prices increase, fewer homeowners will be underwater. With more home equity across the nation, comes more mobility, which will translate into better population inflows in the years to come. There will also be a positive wealth effect.
U.S.
National initial claims for unemployment insurance remains in the same ballpark. Claims are down a modest 3.4% over the past year. This is very unimpressive. Employment data was mixed. Jobs were up by 146,000 in November and the unemployment rate edged down to 7.7%. Employment increased in retail, professional & business services, and healthcare. Hurricane Sandy apparently had little effect in the November data due to the timing of the October and November surveys and definitions of being employed. The bad news was that the labor force participation rate continued to decline. This indicates that more discouraged worker have stopped looking for work.
The University of Michigan Consumer Sentiment index declined to 74.5 in December. This is down from 82.7 in November. The nearing approach of the fiscal cliff isn’t helping consumer sentiment, to say the least.
Consumers are borrowing again, albeit modestly. Total credit outstanding increased 0.5% from last month and was up 6.2% over the last year. Revolving credit was up 1.1% from a year ago while non-revolving credit was up 8.4% from a year ago.
Economic activity in the manufacturing sector contracted in November following two months of modest expansion. Even so, the overall economy grew for the 42nd consecutive month. This is the result of last month’s Institute of Supply Management survey. The index declined to 49.5 in November from 51.7 in October and 52.2 a year ago. Any reading of less than 50 indicates a contraction in manufacturing. This is not good news for this point in the cycle. The index for non-manufacturing continued to increase. It now stands at 54.7 in November compared to 52.6 a year ago.
Total construction spending in the U.S. was up in October. It now stands 1.4% above September and a strong 9.6% above year earlier levels. Private construction was up 15.5% compared to year earlier levels. As would be expected, residential leads the way. Public construction was up for the month but remains 1.0% below year earlier levels.
