Monday’s Update

The Monday Morning Quarterback 
A quick analysis of important economic data released over the last week
The latest employment data and revisions from 2015 show Arizona and its major metro areas have been performing better than originally thought.  The first of two major revisions show that Arizona employment in 2015 was up 2.6% compared to the 2.4% originally reported.  In Greater Phoenix, growth was 3.3% compared to the 2.9% originally reported for 2015. 
In addition, employment data from March show that the state is up 3.1% year to date over last year and Greater Phoenix is up 3.6% year to date.  Greater Tucson was up 2.8%. This is the best growth these areas have seen since the Great Recession.  Arizona is now 7th out of 50 states in terms of employment growth and Greater Phoenix is now 4th out of 32 major metro areas in terms of employment growth.  These are impressive numbers.  They are especially impressive because all sectors except Natural Resources & Mining and Government are up. 
It is also impressive because employment growth appears to be accelerating in the absence of acceleration in population growth.  Population growth appears to be increasing at a rate that is less than 2.0%.  Indeed, net residential utility hookups, a significant indicator of what population is doing, have been weak.  Thus, the data at the moment does not appear to be fitting together as one would like.  Nonetheless, the employment numbers are good news.
U.S. Snapshot:
  • Seasonally adjusted retail sales were down 0.3% in March when compared to February.  Retail sales were up 1.7% from a year ago.  These are weak results.
  • The February manufacturing and trade inventories to sales ratio was steady at 1.41.  This level of inventories to sales is high by historic standards and suggests that either production will be cut or sales will have to pick up to get it back into balance (see chart below).
  • March industrial production was down 0.6% from February and now stands 2.0% lower than a year ago. For the first quarter as a whole, industrial production was down 2.2% at an annual rate.  A substantial portion of the overall decrease in March resulted from declines in the indexes for mining and utilities, which fell 2.9% and 1.2% respectively.  Manufacturing output fell 0.3%.
  • Given the decline in industrial production, it is not surprising that capacity utilization fell to 74.8 in March from 75.3 in February and 77.3 a year ago.
  • Consumer prices as measured by the consumer price index for all urban consumers (CPI-U) increased 0.1% in March on a seasonally adjusted basis.  The index is up 0.9% from a year ago.  All items less food and energy, known as the base rate of inflation, was also up 0.1% and now stands 2.2% above a year ago.
  • The University of Michigan consumer sentiment index fell to a much lower than expected 89.7 in April’s preliminary reading.  This is down from 91.0 in March and 95.9 a year ago.

Arizona Snapshot:
  • The most significant data released this week for the state were the employment revisions.  As discussed above, the revisions indicate that the state and especially Greater Phoenix are doing considerable better than indicated by previous numbers.
  • March employment data was positive.  Year to date, employment in the state is up 3.1%.  For March, it was up 3.2% from a year ago.  Educational and health services, professional and business services, financial activities, information and construction were all strong.  As would be expected, Greater Phoenix, the state’s major economic engine, was up even more rapidly.  Year to date employment was up 3.6% and year over year in March, employment was up 3.7%. Greater Tucson was up 2.8% and 3.1% respectively.    This was a good showing.
  • The unemployment rate in the state in March was 5.4% compared to 5.5% in February.  Nationally, the unemployment rate in March was 5.0%.   The Greater Phoenix unemployment rate fell to 4.5% and Tucson’s was 4.7%. 
  • Arizona is finally in an employment recovery having regained 102% of the jobs lost in the Great Recession.  Greater Phoenix has regained 114% of the jobs lost.  Greater Tucson has regained only 71% of the jobs lost.



credit: Elliott D. Pollock and Company


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