Money Talk Podcast, Thursday, July 2, 2015
Landaas & Company newsletter July edition now available.
Advisors on This Week’s Show
Week in Review (June 29-July 3, 2015)
Significant economic indicators & reports
The U.S. housing recovery continued to raise selling prices in April, according to the S&P/Case-Shiller home price index. The 12-month price increase among 20 cities studied was 4.9%, down a tad from the March pace but even with the rate since 1975. A housing economist with Standard & Poor’s said indicators point to continued expansion in the industry, but there’s more of a trend toward multi-family residences with condominiums and apartments accounting for 34% of all new construction, vs. a 40-year average of 22%.
Recent signs of revived consumer spending got reinforced by a jump in the June consumer confidence index. The Conference Board, a business research group, found through surveys that consumers are encouraged by the current employment market as well as business conditions. The index rose to 101.4 from 94.6 in May. The Conference Board said consumers still appear guarded about their future income prospects.
Manufacturing expanded more than analysts expected in June, at the fastest pace since January and for the 30th consecutive month, according to the Institute for Supply Management. Slowed in recent months by the strong dollar’s drag on exports as well as cutbacks in the oil industry, manufacturing appears to be reviving with the ISM index growing two months in a row.
The recovery in house is spreading to other construction spending as expenditures rose higher than expected in May to an 8.2% year-to-year gain. The Commerce Department reported that spending on residential construction also increased 8.2% from May 2014, and spending on manufacturing expansions climbed 69.5%.
Signs of consumer spending continued as auto dealers sold an annualized rate of 17.2 million vehicles in June, according to Auto Data Corp. That was about what analysts forecast and was down 3.5% from the May rate, though up 1.5% from June 2014. Lower gas prices in the last year helped boost sales of trucks, which were up 8.9% from the year before, vs. a 6.1% decline for cars.
The moving four-week average for initial unemployment claims rose for the first time in three weeks, though it still remained well below the long-term average, indicating that employers are being careful about letting workers go. According to Labor Department data, average jobless claims have been under the 48-year average since early 2013.
Employers added fewer jobs than expected in June and fewer than initially estimated in May and April, the Labor Department said. Still the 223,000 net increase in jobs in June represented a continued healthy hiring pace, which includes additional positions for food workers, retailers, architects and computer systems designers. Wages remain a sticking point in the jobs recovery with average hourly earnings up 2% from June 2014, according to the Bureau of Labor Statistics. That’s down from 2.3% in May. Also, the unemployment rate dropped to 5.3%, its lowest point since April 2008. But economists noted that the rate dropped mostly because more Americans left the labor market.
Continued progress in the manufacturing sector, suggested by the increase reported Wednesday in the June ISM index, contrasted with a 1% decline in factory orders in May. The Commerce Department said orders dropped for the ninth time in 10 months and that durable goods orders were down more than the department had previously estimated.
Markets and most government agencies closed for Independence Day.
Where the Markets Closed for the Week
- Nasdaq – 5,009, down 72 points or 1.4%
- Standard & Poor’s 500 – 2,077, down 24 points or 1.1%
- 10-year U.S. Treasury Note – 2.38%, down 0.1 point
- Dow Jones Industrial – 17,730, down 217 points or 1.2%