POSITIVE SIGNS IN THE NMMA ECONOMIC OVERVIEW FROM JULY 17, 2013
The NMMA Economic Overview, formerly called Boating News Net, is a monthly report on the American boating and economic markets featuring industry and general economic indicators that impact our business. Among the U.S. Economic Indicators of GDP, Consumer Confidence, Unemployment, Retail Sales, the Housing Market and so on, we see the most good news in Consumer Confidence and the Housing Market.
The NMMA Economic Overview commented that Consumer confidence continued to rise in June (up for the third consecutive month) to 81.4, the highest show of confidence since 2 months into the recession. Both short-term outlooks and current assessments were considerably more upbeat. The expectations index improved by 9 points suggesting that consumer confidence will continue to rise.
(Source: Conference Board)
The Overview also noted that 195,000 jobs were added to payrolls in June, the third consecutive month of jobcreation nearing 200,000. Although the unemployment rate was unchanged at 7.6%, more people were looking for work which was a good sign. Average hourly earnings grew 2.0% YOY in June, outpacing inflation at an annualized 1.75%. The broader (U-6) unemployment rate which includes discouraged workers had fallen to a 4.5-year low 13.8% in May but increased in June to 14.3%.
(Source: Bureau of Labor Statistics)
Perhaps the most reassuring dimension was from the Housing Market. Housing starts rose 7% in May to an annualized 914Kunits, up 29% from a year ago. The increase was mostly driven by a 25% surge in construction of multifamily units reflecting an increase in demand for rental options. Meanwhile, building permits for single family homes rose by 1.8% to a five-year seasonally-adjusted, annualized high 622K.
Existing single-family home sales rose 5% to a near four-year high 4.6M in May. The inventory of available existing homes for sale dropped to a 5.1-month supply in May and is unlikely to grow unless new home construction ramps up quickly by an additional 50% according to the NAR. Buyer traffic is up 29% from a year ago and the median time on market for homes is at a record low.
New home sales continued to grow in May to a near five-year high 476K, up 29% from a year ago. Growing households, pent-up demand, and a limited supply of homes continue to put upward pressure on home prices. Mortgage rates have accordingly risen and most economists don’t expect that to impede the housing recovery.
(Source: National Association of Realtors, U.S. Census Bureau)
We feel that an improving U.S. employment picture will lead to improvements in consumer confidence and in turn, to a housing recovery. Ultimately that can take us to a recovery in the boat market but for now, booming auto sales numbers reflect the aging American fleet of vehicles. Those will be the focus of major household expenditures for now.
