Friday Economic Snapshot: Booming stock market contrasts business confidence
Everybody feels better after a nice holiday, and the US economy is largely in the same boat following the 4th of July holiday week. The stock market has climbed throughout the week, and a range of economic indicators has delivered stable or positive numbers.
Job openings have held steady, mortgage delinquencies fell by a solid margin and wholesale inventories point to a surge in U.S. orders and production — the best level since April 2012. However, small business optimism declined in June. Another tidbit, mortgage applications fell 23 percent last week as interest rates continue their steady march upward.
It’s a week of mixed numbers, with little major news one way or another, but let’s get to it.
The Bureau of Labor Statistics reported this week that there were 3.8 million job openings on the last business day of May, which is little change from April’s stats.
While the numbers were steady, the number of job openings rose in the Midwest, but was largely unchanged in the country’s other regions. Industries that experienced an increase in job openings include retail trade, transportation, warehousing, utilities and finance and insurance. Durable goods manufacturing, as well as professional and business services, saw decreases in openings.
With 4.4 million hires in May — also hardly changed from April — general employment stayed the same, as there were 4.3 million separations. We’ll need these hires/separations to diverge much more for any improvement in the U.S. employment situation.
As interest rates steadily increase from their recessionary lows and home prices tick upward, mortgage delinquency rates have fallen, which is excellent news for many sectors of the economy.
Mortgage delinquencies are down more than 15 percent since December of 2012, which is the largest year-to-date drop since 2002, according to a report from Lender Processing Services.
Even better, prime delinquencies have experienced the greatest decline since the January 2010 peak, now down between 40 and 50 percent. With the May 2013 delinquency rate of 6.08 percent, we are now quickly moving back toward the pre-recession levels that reliably hovered around 4.5 percent.
Foreclosures rates have also been falling, but slower and with a longer way to go before dropping to the healthier levels seen, oh, about six years ago now.
Small Business Optimism
From the National Federation of Independent Business (NFIB) comes word that small business optimism dropped in June, ending a short-lived two-month rally.
According to the report, “Small business optimism remained in tepid territory in June, as NFIB’s monthly economic Index dropped just under a point (0.9) and landed at 93.5…”
After starting to rebound in 2009, the Index has been hovering between the upper 80s and high 90s since the start of 2011, and this month’s news continues this rather weak trend.
Even though the stock market seems pleased, most of this week’s economic news is lackluster at best. The drop in mortgage delinquencies is great news, but Gallup’s U.S. Economic Confidence Index mirrors what we’re seeing elsewhere — the economy is currently looking okay, but not as rosy as it was earlier this year.
In the boating world, our industry contact continues suggesting that boat dealerships and marina across the country are busier than ever at the height of the summer season. So, while the rest of the news is less than thrilling, our industry is working hard to pull itself out of its spring slump.