Monday Morning Quarterback - A Quick Analysis of Important Economic Data Released Over the Last Week

Submitted by: Elliott D. Pollack & Company (EDPco) 

Finally, some local employment growth was realized.  Overall, the week’s data was good nationally and suggested that the long awaited turn around in Arizona might finally have arrived.  But don’t expect a whole lot out of this year. 

NATIONAL

The latest release on unemployment insurance claims brings the moving average to its lowest level since July, 2008. This signals continued progress.

 

The Purchasing Manager’s Index for the manufacturing sector released by the Institute of Supply Management is now at its highest level since May 2004.  This suggests that the manufacturing sector continues to gain ground. The index was 61.4 in February 2011 vs. 57.1 in February 2010 and 60.8 in January 2011.  The Manufacturing Employment Index component was at its highest level since January 1973.  It was 64.5 in February 2011 vs. 57.3 in February a year ago and 61.7 in January 2011.

Fourth quarter GDP increased by 3.1%.  This is in line with our expectations.  The GDP deflator for personal consumption expenditures increased by 1.7% in 2010 versus.0.2% in 2009.

Both new and existing home sales showed continued weakness nationally.  New home sales in February 2011 were 28% below year earlier levels.  This reflects the ending of the $6,500 tax credit offered by the Federal Government until April, 2010, the continued high level of oversupply of both new and existing homes, and continued tight credit markets.  Existing home sales fell by 2.8% in February 2011 versus the same period a year earlier after three months of increases.

ARIZONA

Arizona personal income increased by 2.1% in 2010. This put Arizona in the bottom quintile in terms of PI growth in the US last year.  The range was 0.3% for Nevada to 4.2% for New Mexico.

Arizona employment was up 0.2% in February 2011 versus year earlier levels.  This is the first year-over-year increase (revised data) since the recession began in Arizona.  The biggest gains were in education and health services (14,600 jobs), trade, transportation and utilities (4,800 jobs) and leisure and hospitality (4,400 jobs). Manufacturing was up 300 jobs.  It's a start.

Greater Phoenix employment was up 0.7% in February 2011 versus a year earlier but employment in Greater Tucson was down (1.3%).

The unemployment rate in Arizona was 9.6% versus 10.2% a year ago and 8.9% for the US as a whole in February 2011.

According to a report released by the Arizona Department of Revenue, Arizona sales and use tax collections showed some life in February (based on January sales).  Retail sales tax collections as a whole were up 10.4% in February 2011 versus February 2010.  Hotel/motel sales tax collections were up 14.9% in February 2011 versus a year ago reflecting a generalized improvement and the effect of the National Championship football game held in Glendale in January.  Restaurant and bar sales tax collections though, were down 0.5% in February 2011.

Expect the modest but positive economic news to continue, albeit with a few hiccups here and there.

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