The Monday Morning Quarterback

Article originally posted on HERE on July 8, 2019


July 8th, 2019


Hope you all had a fun 4th of July holiday. It has always been one of my favorite holidays of the year not only because of the patriotic connotations but the sunshine, family and friends, shorts and tee shirts, barbecues (which means hot dogs and hamburgers) baseball, a generally lighthearted atmosphere and because it’s downright fun. How good does that sound!!  Now add to that June employment data that is way above expectations. Wow!


The data should cause a good deal of reflection especially among those who just can’t wait to be the first on their block to call the next recession. It makes the May data on employment that caused so much hand ringing look like an aberration. As I just mentioned, the 224,000 jobs created in June was way ahead of expectations. It is actually very good given that it is the 105th consecutive month of employment growth, that the unemployment rate is near a 50 year low and that wage growth is still growing at a moderate rate instead of a rapid rate that would usually be expected at this point in a cycle. Since job growth is growing about twice the rate necessary to absorb the number of millennials entering the labor force, it is those who are reentering the job market that is allowing jobs to grow so rapidly. This is a positive. It won’t last forever but is worth enjoying now.


In other news, new orders for durable goods were down but orders for nondefense goods excluding aircraft were up. Manufacturing continues to expand but at a slower rate. Non- manufacturing continues to grow as well. And construction spending is modestly down.


In Greater Phoenix, the apartment market continues to be hot with demand still exceeding supply. The single family market, on the other hand, is not quite as strong. Overall, the expansion remains intact.


U.S.   Snapshot:


  • Employment in June grew by 224,000 compared to a revised 72,000 in May. The unemployment rate was little changed at 3.7% compared to 3.6% in May and 4.0% a year ago. Thus far this year, employment growth has averaged 172,000 per month.


  • In June, average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents to $27.90. Over the past 12 months, average hourly earnings have increased 3.1%. This is a modest rate of increase given the strong growth in employment and the low unemployment


  • New orders for manufactured goods in May, down for three of the last four months, decreased by 0.7% for the month and are now down 1.2% from a year ago. Durable goods orders were down 1.3% for the month and 2.8% from a year ago. On the other hand, non-defense goods excluding aircraft were up 0.5% for the month and 1.4% from a year


  • The ISM’s manufacturing index fell to 7 in June. This is down from 52.1 in May and

60.0 a year ago. This indicates that the rate of growth is slowing but is still positive. Any reading above 50 indicates that the sector is still expanding.


  • The ISM’s non-manufacturing index fell to 55.1 in June compared to month earlier readings of 56.9 and a year earlier levels of 58.7. Once again, any reading above 50 indicates continued growth in the


  • Construction spending fell in May. It was down 0.8% from April and 2.3% from a year ago. The entire decline was in the private sector which was down 0.7% for the month and 6.3% for the year. The public sector was up 10.8% from year earlier


Arizona Snapshot:


  • According to Real Data, the Phoenix apartment market continues to be hot. Vacancy rates in the second quarter of 2019 stood at 7.3%. This compares to 7.9% in the second quarter of 2018. Rents over that period increased by 8.8% to $1,075 per


  • Total sales volume of single family homes was down 2.6% from year earlier levels in June. New built activity was down 16.6% from a year ago while resale activity was flattish-down a modest 0.5% over the same period.