{"id":1769,"date":"2020-06-23T12:50:34","date_gmt":"2020-06-23T16:50:34","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1769"},"modified":"2020-06-23T12:50:34","modified_gmt":"2020-06-23T16:50:34","slug":"may-new-home-sales-and-june-philadelphia-fed-nonmanufacturing-index","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1769","title":{"rendered":"May New Home Sales and June Philadelphia Fed NonManufacturing Index"},"content":{"rendered":"\n

KEY DATA:<\/strong>  Sales: +16.6%; Over-Year: +12.7%; Prices\n(Over-Year): +1.6%\/ Phila. Fed (NonMan.): -3.6 (up 65 points); Business\nActivity: 7.3 (up 48.7 points)<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cThe leading light, housing, remains on a\nclear upward track.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  Yesterday, when the May existing home sales\nnumbers came out lower than expected, I explained that the data were lagging in\nthat they were closings of contracts signed in previous months.  I suggested we wait a few months to see how\nrecent activity changes conditions. \nWell, if the new housing sales numbers are any indication of the current state\nof the housing market, it looks like things are quite good.<\/em><\/strong>  Purchases, or at least contract signings,\njumped in May with three of the four regions showing demand growth anywhere\nfrom 15% to 45%.  <\/em><\/strong>The only\nnegative was in the Midwest, where sales fell. \nIt is unclear why demand was weak there, but it is also not unusual that\none area differs from the others.  Still,\nthere\nwas one concern in the report: Inventory is extremely low and that could\nrestrain sales, unless construction picks up. \nAs for prices, they rose, but only modestly. <\/em><\/strong>  <\/em>  <\/p>\n\n\n\n

NonManufacturing activity picked up in the\nMidAtlantic area.<\/em><\/strong>  The Philadelphia Fed\u2019s Index\nwent from a record low to a nearly flat condition.  But remember, this is a diffusion index and it\nonly shows direction, not magnitude of change. \nIndeed, the negative index points to continued weakness in the economy,<\/em><\/strong>\nthough the business index did show some gains. \nThat said, this was not a great report. \nOrders are still falling sharply, order books are thinning and payrolls\nfor both full-time and part-time workers continue to be cut. <\/em><\/strong> Those details point out that changes in\ndiffusion indices have to interpreted very carefully.    <\/p>\n\n\n\n

IMPLICATIONS:<\/strong>  At least housing is in good shape.  With mortgage rates incredibly low and the\nFed making sure there is plenty of money to go around (and around and around),\nas long as the virus doesn\u2019t get totally out of hand, this sector should\ncontinue to do well. <\/em><\/strong> For the\nnext few months, as the reopenings continue, the darkest cloud is the virus\nsurge in those parts of the country that didn\u2019t have major problems early in\nthe pandemic.  The virus sets its own conditions\nand even if areas don\u2019t return to shut down status, a high level of cases would\nrestrain a wide range of activities.  We still\nhaven\u2019t had a massive return of workers to downtown areas and high rises,\nespecially in the hardest hit areas.  <\/em><\/strong>That\ncould take months and it is unclear what will happen when they do return.  All those support businesses that depend\nupon office workers for their income are going to be stressed for a long\ntime.  That means governments that depend\nupon tax revenues generated by those activities will continue to see shortfalls\nin income. <\/em><\/strong> For example, the\nlatest data from the City of Philadelphia has May tax revenues down 31.2% from\nthe May 2019 level.  But investors see nothing but\nblue skies ahead and exuberance is hard to restrain. <\/em><\/strong> In other words, equity prices are delinked\nfrom economics and the potential for earnings, and when that happens, forecasting\nthe direction of the markets becomes even more difficult than forecasting the\nweather more than a few hours out.  <\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  Sales: +16.6%; Over-Year: +12.7%; Prices (Over-Year): +1.6%\/ Phila. Fed (NonMan.): -3.6 (up 65 points); Business Activity: 7.3 (up 48.7 points) IN A NUTSHELL:  \u201cThe leading light, housing, remains on a clear upward track.\u201d WHAT IT MEANS:  Yesterday, when the May existing home sales numbers came out lower than expected, I explained that the … Continue reading May New Home Sales and June Philadelphia Fed NonManufacturing Index<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1769","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1769","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1769"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1769\/revisions"}],"predecessor-version":[{"id":1770,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1769\/revisions\/1770"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1769"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1769"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1769"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}