IHS Global Insight, that guru of the economic research, unveiled forecasts over the weekend on a slew of economic reports due out this week.
Keep the asprin and kazoos handy. If correct, IHS predictions signal headaches for some and party time for others, depending on your area of interest.
Good news is expected on August's new home sales and prices front on Monday and Tuesday. Single-family housing permits rose 2.5 percent in August, prompting IHS to predict that new home sales could grow by 2.5 percent as well. It's not much growth, but indicates some movement for a very hard hit industry.
Sadly, things aren't looking so hot for consumer confidence, orders for numerous durable goods or real personal income. That’s a bummer, but not entirely unexpected after the markets continued their breath-catching freefall late last week. Consumer confidence wins the entire bottle of Excedrin.
Notable exerpts from the full IHS report are below.
Monday, September 26 – New Home Sales (Aug.)
IHS Global Insight: 0.305 Mil.
Consensus: 0.295 Mil.
Last Actual: 0.298 Mil (Jul.)
What to Look For
A token increase in sales.
Single-family housing permits increased 2.5% in August. Based on this, we project that new home sales also grew by 2.5% in August, to a 305,000 annual rate. This market remains stuck at the bottom and the short-term outlook is for it to stay there.
Tuesday, September 27 – S&P/Case-Shiller Home Price Index (Jul.)
IHS Global Insight: -4.4%
Last Actual: -4.5% (Jun.)
What to Look For:
The 20-city composite will be up for the fourth straight month, but will be down 4.4% year-on-year.
Implications: Housing prices appear to be stabilizing. The FHFA monthly (purchase only) house price index, for example, has risen four straight months. The reasons behind the recent stabilization are unclear, but falling mortgage rates are likely playing a key role. Our call is that the monthly seasonally adjusted Case-Shiller 20-city composite index will be up slightly (0.1%) in July. This translates into a 4.4% year-on-year drop in the not-seasonally adjusted index.
Tuesday, September 27 – Conference Board Consumer Confidence (Sep.)
IHS Global Insight: 44.0
Last Actual: 44.5 (Aug.)
What to Look For
Implications: We expect the Conference Board's consumer confidence index to drop from 44.5 in August to 44.0 in September.
In August, consumer confidence fell almost 25%. There's been no good news in September to brighten the mood.
(Note: the plunge in equities after the Fed's policy decision probably came after the survey period ended, so didn't do extra damage to the September confidence reading).
Wednesday, September 28 – Durable Goods Orders (Aug.)
IHS Global Insight: 0.0%
Last Actual: 4.0% (Jul.)
What to Look For
Flat orders and a drop in core orders.
Implications: Durable goods orders surged 4.0% in July, driven by aircraft orders. We expect orders to be flat in August.
Boeing received another 100-airplane order, this time from Delta, so aircraft orders should climb higher.
But the rest of the picture won't look good. Core capital goods orders should fall about 1%, and motor vehicle and metals orders should be down sharply after a very strong July.
Thursday, September 29 – Real Gross Domestic Product (Third estimate, Q2)
IHS Global Insight: 1.3%
Last Actual: 1.0% (Second estimate, Q2)
What to Look For
We expect second-quarter GDP growth to be revised up to 1.3% from the previous estimate of 1.0%.
Implications: Revised data showing better net exports and a stronger increase in private nonresidential construction are the key reasons.
Gov. Mark Dayton and 24 Minnesota trade delegates are hopping across the Pacific this weekend in search of lucrative contracts in Japan and South Korea.
Officials from Boston Scientific; Medtronic; Minnesota ag product companies and law firms are part of the delegation that also includes officials from the Minnesota Trade Office, the Minnesota Department of Employment and Economic Development, The University of Minnesota, and The University of St. Cloud.
While the weeklong agenda officially doesn’t kick off until Sunday, Dayton lands in Japan Saturday. He will be in Tokyo until Tuesday glad-handing government and corporate officials.
While a key focus of the week is South Korea, Japan is significant; it is Minnesota’s third-largest trading partner of manufactured goods behind Canada and China.
Grain purchases are the star of the state’s relationship with Japan. The country’s purchases of Minnesota corn, wheat and other cereals jumped 43 percent in the second quarter to $384 million.
Dayton and Minnesota’s trade delegates may have harder work cut out for them in South Korea. State exports to that country grew 10 percent to $193 million in the second quarter and reached $605 million for all of last year. South Korea, Minnesota’s seventh-largest trading partner, tends to buy auto parts, medical devices as well as grains.
EarthClean Corp. is among the Minnesota companies hoping to make a good impression in Seoul. EarthClean is sniffing for customers for its TetraKO product. The corn-starch-based powder mixes with water to create a biodegradable gel that puts out fires faster than water, foams and other retardants. The South St. Paul based company calls TetraKO it’s “a secret sauce.”
Given the grain needs of both Japan and South Korea, it’s not surprising that a good chunk of Minnesota’s delegation stems from the ag sector. Delegates include The Agricultural Utilization Research Institute; the Midwest Dairy Association; The Minnesota Corn Growers Association; The Minnesota Farm Bureau Federation; The Minnesota Farmers Union and the Minnesota Soybean Association.
“Looks like there is a lot of interest in selling Minnesota farm commodities over there,” said Monte Hanson, spokesman for the Minnesota Department of Employment and Economic Development.
Let’s hope South Koreans are hungry.
Minnesotans' wages and other personal income grew by 1.3 percent in the second quarter. Sadly, that is down from 1.8 percent in the first quarter, according to estimates released Thursday by the U.S. Bureau of Economic Analysis.
For the nation, personal income growth slowed to 1.1 percent from 2.1 percent in the first quarter. While not great, at least there was some growth. But don’t party yet.
Economists noted that some of the gains in wages, salaries and other forms of income were merely a result of the government’s reduction in Federal Social Security taxes.
If accurate, it’s sobering information and one more indication that the economic recovery continues to largely stall.
Nationally, income growth rates ranged from 2.2 percent in Nebraska and South Dakota to a measly 0.7 percent in the states of Washington and Georgia.
The stubbornly slow economy means retailers could shorten their list of 2011 holiday hires from last year, according to a new report out Monday by employment pros Challenger, Gray & Christmas.
In a missive entitled “Slowing Recovery Threatens Holiday Hiring,” Challenger forecasts that seasonal job gains in the retail sector will be the same or lower than a year ago when employment grew by 627,600 jobs from October through December.
They admit that last year’s holiday hiring proved “better than expected” with a (stunning) 27 percent leap from the dismal recession-burdened retail season of 2008. That year proved a “the worst showing since 1982.”
Fast forward to next month, and officials fear that consumers may pull back again given the recent weak economic news.
• Last week the U.S. Commerce Department reported that August retail sales failed to change from July and went further in downgrading July’s previous report.
• Separately, the International Council of Shopping Centers forecast a 3.5 percent growth in retail sales for November and December. That’s below the 4.4 percent seen in 2010.
“The retail environment has improved significantly since 2008, when the recession was at its worst. However, retailers are seeing several signs that consumer spending is dipping just as they are beginning to make decisions about how many workers to add for the upcoming holidays. This does not bode well for job seekers,” said CEO John Challenger in a statement. “It would be surprising if holiday hiring exceeded last year’s level.”
He added that holiday employment gains will “definitely” not reach pre-recession levels, when stores hired an average 720,000 seasonal hires from October to December.
In Minnesota, the home of behemoths Best Buy and Target, state officials noted last week that the Trade, Transportation & Utilities sector that includes retail gained 12,400 jobs between August 2010 and August 2011. The sector gained 4,100 jobs in August alone.
However, Steve Hine, director of Minnesota's Labor Market Information Office, credited those job gains to spikes in the wholesale sector, not retail.
Are you plannig to seek a job this holiday season? If so, contact firstname.lastname@example.org
Americans feel stuck in mud. A muddy economy that it is.
A new survey by the financial research gurus at SageWorks Inc. found that 76 percent of surveyed bankers and accountants believe the economy will be the same or worse in the next 12 months.
Say, it’s not so!
Only 21 percent of the 613 polled believed that sunnier days were ahead. A meager 1.8 percent of respondents think the economy will be “much stronger” in one year.
So much for optimism. Sounds like the economy could use a strong dose of Vitamin D, Prozac or Geritol.
Afterall bankers’ dismal perceptions aren’t getting any help from Wall Street, The White House, The Fed or labor market economists who worry, worry, worry that the nation may be on the cusp of a second recession.
Given the zero employment gains in August, debt woes across Europe and the news that initial jobless claims recently hiccupped higher, it’s no wonder the country’s financiers are down in the dumps.
Sageworks asked CPAs, bankers and credit union execs the following:
Based on what you see with your clients, will the economy be better or worse in a year from now?
• 54.5% said the economy will be the same in 12 months.
• 19.4% said it will be worse
• 2.8% said it will be much worse
• 1.8% said it will be much stronger
• 21.7% said it will be stronger.
Minnesota exports of manufactured, agricultural and mining products grew 12 percent from a year ago to $5.3 billion in the second quarter of 2011, according to figures released Wednesday by the Minnesota Department of Employment and Economic Development (DEED).
Manufacturing dominated three key export categories, accounting for $4.7 billion in sales, up 10 percent from the same quarter one year ago.
Canada, China, Japan and Mexico saw were the state's largest trading partners for the quarter. The news was celebrated by state officials.
"This is great news that shows Minnesota is continuing the momentum that began last year and carried through our record first quarter," said DEED Commissioner Mark Phillips. "Strong exports are contributing to business growth and creating jobs in Minnesota."
By global region, North America accounted for 35 percent of state exports sales, followed by Asia at 34 percent and the European Union at 20 percent.
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