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"WASHINGTON - Orders for durable goods rose last month by the largest amount in two years, as the manufacturing sector rebounded from the depths of the recession.
The Commerce Department said Wednesday that orders for goods expected to last at least three years increased 4.9 percent in July, the third rise in the past four months. Analysts expected a 3 percent increase. Orders for June were revised up to a 1.3 percent drop, from a 2.2 percent decline."
This comes a day after Consumer Confidence showed a larger increase than expected - up to 54.1, from an upwardly revised 47.4 in July - this after bottoming out down at a record 25.3 in February. We're still not where we need to be of course (90 is considered "healthy") but it is continuing to move in the right direction. Likewise consumers’ expectations for the economy over the next six months rose to 73.5 from 63.4 in July, which is the highest level in nearly 2 years (since December 2007, when the recession first began). Consumer Confidence of course is the one big remaining factor missing for the recovery to really take hold. So far the banks have been stablized (though there are still some challenges ahead), home prices have stabilized (see paragraph below) and are rising (still some future challenges there of course), and the number of new layoffs dropping rapidly (and even an employer survey yesterday showing 8 of 10 employers intend to hire next year).
Also making news yesterday was the fact that home prices ROSE in the 2nd quarter (for the 1st time in something like 3 years). Later today a report will be released showing new homes sales (which have increased 3 months in a row).
All in all, a lot of good news this week.
We'll have to see if we can keep it up as the week progresses.
We need all the good news we can get.
And now comes the housing sale numbers and they are VERY GOOD INDEED - new home sales in July surged up 9.6%. This is the 4th straight monthly increase - and further sign that the housing market has stabilized. So, home prices are up AND home sales are up. Personally, I expect to see an even bigger surge coming in both sales and prices as folks on the fence decide to take the leap and buy while we are near the bottom (and before the potential expiration of the $8,000 tax credit in November).
New-home Sales Jump Nearly 10% In July - FOXBusiness.com (http://www.foxbusiness.com/story/markets/industries/real-estate/new-home-sales-jump-nearly--july/ - broken link)
And now comes the housing sale numbers and they are VERY GOOD INDEED - new home sales in July surged up 9.6%. This is the 4th straight monthly increase - and further sign that the housing market has stabilized. So, home prices are up AND home sales are up. Personally, I expect to see an even bigger surge coming in both sales and prices as folks on the fence decide to take the leap and buy while we are near the bottom (and before the potential expiration of the $8,000 tax credit in November).
New-home Sales Jump Nearly 10% In July - FOXBusiness.com (http://www.foxbusiness.com/story/markets/industries/real-estate/new-home-sales-jump-nearly--july/ - broken link)
Ken
I also read homebuilders are buying land now. they had been selling for a while. I will try to find the link.
Thanks.
Interesting reading. It sounds like a whole slew of homebuilders are buying up land again - a pretty good indication that they optimistic about the future housing market.
FYI - I was reading Peter Schiff (the master of doom and gloom) today - and as usual with him, he says some things that make sense and other things that really don't make any sense at all. In this particular instance he was trying to belittle the massive rise the stock market has made this year and dismiss the notion that the stock market is a leading indicator of the economy as a whole. Here's what he said:
"According to official government statistics, the current recession began in December of 2007. Two months earlier, in October of that year, the Dow Jones Industrial Average and S&P 500 both hit all-time record highs. Exactly what foresight did this run-up provide? Obviously markets were completely blind-sided by the biggest recession since the Great Depression. In fact, the main reason why the markets sold off so violently in 2008, after the severity of the recession became impossible to ignore, was that it had so completely misread the economy in the preceding years."
The problem with this statement is that it's misleading and just plain wrong - and actually helps to PROVE the point that the stock market IS a leading indicator of the economy (rather than DISPROVE it as he's trying to do). First off all he says that the market hit it's all time in October 2007 and that the recession began in December 2007. He uses this as some kind of "proof" that the market didn't foreshadow the recession. What he DOESN'T mention is that between that October high and the start of the recession in December, the market plunged 1,000 points (BEFORE the recession began) - so the markets were ALREADY on the way down before the recession even started (ie a LEADING indicator of what was to come).
On top of this, lets keep in mind that the recession was not even recognized as a recession until the middle of 2008 - by which time the DOW had plunged another 1,800 points (for a total drop of nearly 3,000 points from it's high). All this BEFORE economists pronouced we were officially in a recession. Sounds like it was WAY ahead of the curve in regards to being a leading economic predictor to me. So the markets were NOT blind-sided at all as he claims (very selective memory on his part) and in fact WERE a leading economic indicator (as most economists consider it to be).
And for the past 6 months, that leading economic indicator has been rising at an historically fast rate - now, more and more evidence is piling up that the stock market was right - the financial markets are healing, housing has stablized and is starting to take off, and job layoffs are shrinking (and companies planning on hiring next year).
All of this is good news.
Aug. 28 (Bloomberg) -- Intel Corp., the world’s biggest chipmaker,
raised its sales forecast for this quarter, adding to evidence that
computer demand is recovering.
Third-quarter sales will be at least $8.8 billion, Intel said in a
statement today. That compares with at least $8.1 billion
the company projected last month. The company also increased
its gross-margin forecast for the period.
The problem remains Unemployment which leads to the lack of consumer confidence.
Consumer Mood Hits Four-Month Low in August - Economy * US * News * Story - CNBC.com (http://www.cnbc.com/id/32595112 - broken link)
We will see if this begins to change in the next few months.
Oh, I agree 100%.
Consumer sentiment (or confidence) is the LAST piece missing to get a substantial recovery going (and that lack of confidence is driven by the fear that folks will lose their jobs). Everything else is in place - diminished inventories, largely (not entirely) stablized banks, job cuts dropping, and home prices stable and rising.
As I've said before, I expect that the labor situation will turn around by the spring. In many companies workers are currently overworked because the job cuts were too severe - and the managment knows that, but for the moment they are waiting for more signs of recovery before they start re-hiring. As those signs come companies will begin rehiring - likely with temp workers at first but then with full-time permanent workers.
Aug. 28 (Bloomberg) -- Intel Corp., the world’s biggest chipmaker,
raised its sales forecast for this quarter, adding to evidence that
computer demand is recovering.
Third-quarter sales will be at least $8.8 billion, Intel said in a
statement today. That compares with at least $8.1 billion
the company projected last month. The company also increased
its gross-margin forecast for the period.
Yup - and for all those doom and gloom folks out there - note that this is an increase in ACTUAL DEMAND (not just an improvement in the botttom line because of cost cutting).
As time goes on more and more companies will issue such reports.
Oh, I agree 100%.
Consumer sentiment (or confidence) is the LAST piece missing to get a substantial recovery going (and that lack of confidence is driven by the fear that folks will lose their jobs). Everything else is in place - diminished inventories, largely (not entirely) stablized banks, job cuts dropping, and home prices stable and rising.
As I've said before, I expect that the labor situation will turn around by the spring. In many companies workers are currently overworked because the job cuts were too severe - and the managment knows that, but for the moment they are waiting for more signs of recovery before they start re-hiring. As those signs come companies will begin rehiring - likely with temp workers at first but then with full-time permanent workers.
Ken
I hope so. I am just reluctant to believe right now. Call it a cautious outlook.
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