Jeremy Glaser: For Morningstar, I'm Jeremy Glaser.
Housing and manufacturing have been two question marks for the economy.
I'm joined today by Bob Johnson, our director of economic analysis, for an update on both those sectors. Bob, thanks for joining me.
Bob Johnson: Great to be here today.
Glaser: Let's start with housing.
New home sales data looked a little bit better.
Johnson: Yeah, it did.
On a year-over-year basis, we're continuing to do quite well there.
Up 9% same month to same month year over year, and year to date we're up about 11% or so compared to the same months a year ago.
That's a pretty good number.
Now month to month, we grew a little bit slowly.
The numbers are a little disappointing to some, but we're still very close to the record high number on this--recovery that is--on that number.
I'm really quite pleased with that number.
Glaser: What's happening with pricing in the new housing market?
The median home price is down about 3% or so, which is good news and bad news.
We've talked forever about first-time buyers and the low end of the market not being very well served.
There really isn't much available out there.
We're glad to see that builders are responding and building lower priced homes, which is helping the sales numbers, which is very good.
But that's unit sales, and unfortunately, each unit is now smaller, so it's going to have a little bit smaller impact on residential investment and even GDP.
Glaser: Existing home sales on the other hand have looked a little bit more anemic.
What's holding back that market?
Johnson: Yeah, existing home sales have been very anemic.
It looks like in the second quarter that sales are going to be down compared to the first quarter.
That's likely to mean there'll be a small detraction from residential investment and GDP.
That was a little bit of a disappointment to see that.
But what's happening in that market is that there just isn't enough inventory available.
Things that are coming on the market are moving very quickly.
It's a chicken and egg problem now.
People don't want to put their homes on the market because they hear all these horror stories about bidding wars when they go to buy their followup home, so a lot of people are staying put and making do. We've talked for a long time about demographics as well, as more and more baby boomers are in retirement age, they tend to actually stay put more than a young person would.
We've got that dynamic going on a little bit too.
It's not been a great market.
It's really on a year-over-year basis, it's grown 2% or so, so very slow compared to the--we talked about new home sales being up 11% year to date.
You've got tossed in some of the custom homes market in there.
The total home market including not just tract homes is up maybe 8 to 10%.
That's the far stronger market in terms of growth, but there just isn't much activity in the existing home markets.
Glaser: Let's shift our focus to manufacturing.
We had some flash data, some preliminary data out of the U.S. and also Europe and Japan.
Anything surprising to you there in terms of manufacturing strength?
Johnson: Well, it looks like everything hit a wall--didn't get any better, didn't get any worse in the most recent month of data.
Japan, Europe, and the United States all had readings very similar to what they were the month before.
In the case of Europe, a little bit stronger, 57-ish.
In the U.S. and in Japan, about 52.
Recall that Europe's been on a general uptrend in terms of industrial production, a lot of that coming out of a stronger consumer and better auto sales.
That's certainly been good news for Europe.
That seems to have plateaued just a bit, but summer months aren't the greatest months to judge that.
Then if you look at the U.S., generally been trending down, so at least we've stopped some of that erosion.
Japan is just up a little tick but basically nothing really changed there.
Manufacturing is not busting out.
I think people hoped with things strengthening in China a little bit and in some other markets.
In general, there was a big hope that maybe manufacturing around the world would strongly accelerate.
It certainly isn't strongly accelerating anymore.
Glaser: Maybe nothing to really fret about in housing and manufacturing, but no signs that they're going to power growth in the back half of the year.
Johnson: That's right.
I think a lot of people had hoped earlier in the year that those things would be a big help.
They're a help, but it's not any more than people expected and maybe even just a slight bit less.
Certainly, it's not going to be the savior of the economy, the manufacturing or housing.
We're going to need something else to really kick it in to accelerate growth here in the second half.
Glaser: Bob, thank you.
Johnson: Thank you.
Glaser: For Morningstar, I'm Jeremy Glaser.
Thanks for watching.