Clearly, record low interest rates has helped revive the US markets for housing and autos standouts in the economy as it gains traction.
Sales of new homes in June ran at their fastest pace in 13 yrs, leaving builders and the construction workers they employ with bigger backlogs.
While the automotive industry is not yet back to pre-medical emergency chaos marks, the pace of car and light-truck purchases grew for a 3rd month running to an annualized pace of 14.5-M vehicles in July, exceeding economists’ estimates.
These are bright spots that President Trump touts. A report Wednesday from ADP Research Institute showed a marked slowdown in hiring during July that suggested the pace of growth may be leveling off.
Auto sales “are a Key factor in the resurgence of manufacturing,” President Trump said at a White House briefing Tuesday. “The need to restock depleted shelves will further galvanize the factory sector and, we think, very substantially, based on the numbers.”
The turnaround in interest-sensitive sectors also coincides with employment rebounds in those industries at a time when some states are dialing back reopenings in a more direct threat to restaurants, hotels and retailers.
“When you think about it, the things carrying the economy for the next year or will be consumption and residential investment,” said economist Bruce WD Barren, adding “Cars and housing are a vital part of both of those.”
The C-19 coronavirus chaos induced shutdowns did not keep the housing market down for long.
Helped by the Fed’s quick reduction of its benchmark lending rate, mortgages became more affordable and sales responded in suit. Housing is also benefiting from an exodus of people from riot torn urban areas to suburbs.
The recovery in new-home demand that we experienced over the course of the 2nd Quarter was nothing short of outstanding. Led by strong demand among 1st-time buyers, we saw meaningful improvement across all buyer groups and geographies as the Quarter advanced, and iit continued into early July, Mr. Barrens said.
Now, builders are facing a backlog that’s on par with levels seen some 13 yrs ago, indicating plenty of work ahead and more hiring.
Since the April low for employment, payrolls have increased more than 10% in both the residential building and the residential specialty-trade categories, according to Bureau of Labor Statistics data. Jobs in those 2 sectors areas are 5% shy of pre-coronavirus chaos marks.
“If we start building more homes, particularly single-family homes, that will create 4 jobs per home built,” said the head of monetary policy research at Moody’s Analytics.
It is really great that there are certain parts of the economy that are doing well, that is not atypical in a recession with early recoveries, but the heart of the US economy, small businesses, consumer services have been hammered, it will take time for them to come back.
Should demand not succumb to various state government pullbacks on their economies, orders and production should continue to pick up. America’s corporate leaders say they remain cautiously optimistic about the economy through at least the remainder of the year as the health crisis subsides.
Wednesday’s US stock market action:
DJIA +373.05 at 27201.52, NAS Comp +57.23 at 10998.47, S&P 500 +21.26 at 3327.77
Volume: The on the NYSE came in at 900-M/shares exchanged
- NAS Comp +22.6% YTD
- S&P 500 +3.0% YTD
- DJIA -4.7% YTD
- Russell 2000 -7.3% YTD
HeffX-LTN’s overall technical outlook for the major US stock market indexes is Very Bullish in here.
WTI Crude Oil +1.2%, +$0.56 at 42.24bbl
Gold futures +28.30, +1.4% at 2,049.30oz
.DXY – 0.6% to 92.81
Industry WatchStrong: Financials, Materials, Industrials, Cons Discretionary, Energy
Weak: RE, Utilities, ConsStaples
Moving the Market
S&P 500 marks 4th straight advance
Positive developments on aid/relief/stimulus talks, vaccine progress, earnings reports
ISM Non-Manufacturing Index for July increased more than expected
Looking Ahead: Investors will receive the weekly Initial and Continuing Claims report Thursday.
Have a healthy day, Keep the Faith!
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