{"id":418,"date":"2015-01-06T10:23:40","date_gmt":"2015-01-06T15:23:40","guid":{"rendered":"http:\/\/naroffeconomics.com\/?p=418"},"modified":"2015-01-16T18:09:16","modified_gmt":"2015-01-16T23:09:16","slug":"january-supply-managers-non-manufacturing-survey-november-durable-goods-orders-and-home-prices","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=418","title":{"rendered":"January Supply Managers\u00e2\u20ac\u2122 Non-Manufacturing Survey, November Durable Goods Orders and Home Prices"},"content":{"rendered":"

INDICATOR:<\/span><\/strong> January Supply Managers\u00e2\u20ac\u2122 Non-Manufacturing Survey, November Durable Goods Orders and Home Prices<\/strong><\/p>\n

KEY DATA:<\/span><\/strong> ISM (Non-Manufacturing): -3.1 points\/Employment: -0.7 point\/Orders: -0.7%; Capital Spending: 0%\/Home Prices (monthly): +0.1%; Over-the-Year: +5.5%<\/p>\n

IN A NUTSHELL:<\/span><\/strong> \u00c2\u00a0\u00c2\u00a0\u00e2\u20ac\u0153The economy hardly ended the year with a bang, but only because the recent pace was not sustainable.\u00e2\u20ac\u009d<\/em><\/strong><\/p>\n

WHAT IT MEANS:<\/span><\/strong> \u00c2\u00a0It would be great if we could get a string of five percent growth rates, but the likelihood that the third quarter pace will be duplicated anytime soon is not great.\u00c2\u00a0 What would be good is if the economy eases only modestly and that looks to be the case.\u00c2\u00a0 The Institute for Supply Management\u00e2\u20ac\u2122s December index of non-manufacturing activity fell solidly,<\/em><\/strong> but there is no reason to worry.\u00c2\u00a0 Yes, just about every component posted decent declines, but the levels also matter and they are still pointing to decent growth.<\/em><\/strong>\u00c2\u00a0 That is, the services sector is coming down from extremely high levels to more sustainable and solid levels.\u00c2\u00a0 Indeed, hiring continues to be strong and dropped the least of all components. <\/em><\/strong>\u00c2\u00a0The one change that does cause a little concern is the sudden shrinkage in order books.\u00c2\u00a0 The thinning was modest, though.<\/p>\n

As second indication that the summer\u00e2\u20ac\u2122s breakneck pace is cooling was the drop in durable goods orders in November. <\/em><\/strong>\u00c2\u00a0Interestingly, while these data are usually really volatile, there was no sector, except defense aircraft, that posted either a large change.\u00c2\u00a0 As for business spending, executives continue to be cautious, as capital goods orders were flat<\/em><\/strong> after having dropped the previous two months.\u00c2\u00a0 I guess a strong economy is not enough to get firms to invest in the future.<\/p>\n

Housing prices look like they have finally stabilized.\u00c2\u00a0 <\/em><\/strong>The year-over-year increase had been slowing for quite some time but we the latest data are indicating the drop is largely over.\u00c2\u00a0 CoreLogic\u00e2\u20ac\u2122s November index showed a rise in both the monthly change and the yearly increase.<\/em><\/strong>\u00c2\u00a0 Every state and 96 of the top 100 metro areas posted increases since November 2013.<\/p>\n

MARKETS AND FED POLICY IMPLICATIONS:<\/span><\/strong> The quarterly GDP growth rates always bounce around even when conditions are great.\u00c2\u00a0 The summer\u00e2\u20ac\u2122s 5% pace was way above expectations but we really are not sure what trend growth will look like.\u00c2\u00a0 I think we can expand at or above 3.5% this year.\u00c2\u00a0 Consensus is around 3%. <\/em><\/strong>\u00c2\u00a0As long as energy prices don\u00e2\u20ac\u2122t spike, consumers will have lots more income to spend and the likely gains in wages will only add to purchasing power.\u00c2\u00a0 Ultimately, businesses will recognize that the U.S. economy has turned the economy and investment will rise with that epiphany.\u00c2\u00a0 Think about it.\u00c2\u00a0 The Conference Board\u00e2\u20ac\u2122s CEO Confidence Index declined in the third quarter even as the economy was soaring.\u00c2\u00a0 So who knows what drives thinking in the corner office?\u00c2\u00a0 Maybe executives are more worried about the rest of the world, which is clearly a concern.\u00c2\u00a0 But the U.S. is hardly a problem.\u00c2\u00a0 Regardless, we get the December employment numbers this Friday<\/em><\/strong> and that is what will likely drive investor and Fed thinking.\u00c2\u00a0 Don\u00e2\u20ac\u2122t expect another job gain number anywhere near 300,000, but it should be decent and the unemployment rate could decline even if the participation rate rises. <\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

INDICATOR: January Supply Managers\u00e2\u20ac\u2122 Non-Manufacturing Survey, November Durable Goods Orders and Home Prices KEY DATA: ISM (Non-Manufacturing): -3.1 points\/Employment: -0.7 point\/Orders: -0.7%; Capital Spending: 0%\/Home Prices (monthly): +0.1%; Over-the-Year: +5.5% IN A NUTSHELL: \u00c2\u00a0\u00c2\u00a0\u00e2\u20ac\u0153The economy hardly ended the year with a bang, but only because the recent pace was not sustainable.\u00e2\u20ac\u009d WHAT IT MEANS: \u00c2\u00a0It … Continue reading January Supply Managers\u00e2\u20ac\u2122 Non-Manufacturing Survey, November Durable Goods Orders and Home Prices<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28,3,40,23],"tags":[],"class_list":["post-418","post","type-post","status-publish","format-standard","hentry","category-durable-goods-orders","category-economic-indicators","category-home-prices","category-supply-managers-non-manufacturing-index"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/418","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\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=418"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/418\/revisions"}],"predecessor-version":[{"id":419,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/418\/revisions\/419"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=418"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=418"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=418"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}