Monday, November 21, 2011

ECONOMIC UPDATE ~ UNITED STATES AND ARIZONA

It was a good week for the U.S. economy, despite what was going on in Europe . The Conference Board Index of Leading Indicators was up to 117.4 from 116.3 last month (September) and 110.1 from October, 2010.  The indices for both coincident and lagging indicators were also up from prior month and year levels.

Industrial production grew again.  It expanded 0.7% in October after only declining 0.1% in September.  Previously, industrial production was reported to have gained 0.2% in September.  At 94.7% of its 2007 average, total industrial production for October was 3.5% above its year-earlier level.  Capacity utilization for total industry stepped up to 77.8%, a rate 2.3 percentage points above its level from a year earlier but still 2.6 percentage points below its long run (1972-2010) average.  This is a key to the recovery because major increases in business spending for new plant is not likely to occur until capacity utilization reaches 80% or more.

The Consumer Price Index for All Urban Consumers (CPI-U) declined by 0.1% in October on a seasonally adjusted basis.  The index now stands 3.5% over year earlier levels.  Core CPI (CPI-U less food and energy) was up 0.1%.

National retail sales, according to advanced estimates, increased 0.5% from September, 2011and 7.2% from October, 2010.  Retail sales excluding autos grew by 0.6% over last month.

Housing had a "better than expected" month but the expectations were low.  Privately-owned housing starts in October were at a seasonally adjusted annual rate of 628,000.  While this is below the September level of 630,000 units, it is well above year earlier levels of 539,000 and expectations of about 600,000 units.  Housing permits were also higher than prior month and year levels.

Locally, employment gains continued.  Total nonfarm jobs were up 44,700 over year earlier levels to 2,433,500 in the state.  That is a gain of 1.9% over October, 2010 and a 0.8% gain over the first 10 months of 2010.  For Greater Phoenix, job gains were 43,200.  That equates to gains of 1.8% for October, 2011 vs. October, 2010, and a gain of 1.1% for the first 10 months of 2011 compared to the first 10 months of 2010.  While these gains are modest and weak when compared to the extent of the decline since 2007, at least employment is growing.

In housing news, R. L. Brown reports that 543 permits were recorded in October compared to 485 in October, 2010.  Year to date, there have been 5,817 permits for 2011 compared to 6,119 permits for the same period in 2010.  Median new home prices were $218,504 in October while median resale prices were $110,000.  According to the Cromford Report, the average number of listings on MLS is 27,354 homes so far in November compared to 45,836 listings in November, 2010.  Days on market were down to 93 in October of this year compared to 104 in October of last year.

Overall, slow growth seems to be the order of the day.  That is likely to remain for quite some time.  At least it is improvement.

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