As investors in commercial property and other assets, you and I know full well the importance of knowing what’s happening at any given time to the economy as a whole. So when I came across the most recent report from the Institute for Supply Management, I paid close attention to what it had to say about where we are economically, and what that might mean to future investment appreciation or decline.
According to the report, the monthly index of manufacturing showed a nice increase from December to January, rising from 54.9 to 58.4. Two things about this are worthy of note: one, this marks the 6th consecutive month of expansion, the fastest upward movement since summer of 2004. Two, any reading above 50 signals expansion, and that’s a good thing.
On the other hand, total construction, projected to decrease jut 0.5%, actually fell 1.2% in December on the heels of another 1.2% decline in November.
Home sales were reported up by 11% in December over the same month a year ago, while the U.S. non-manufacturing sector rose to 50.5 in January, just short of the anticipated increase of 51.
Mortgage applications, another good indicator, showed a rise for the week ending January 29 of 21%, with purchase volume increasing by 10.3%, and refinancing applications up by 26.3%
From the Commerce Department, we hear that December factory orders increased by 1%, double what some leading economists had predicted. This marks the fourth month in a row where factory orders were reported up over the previous year’s results.
Productivity, of course, is another indicator we keep an eye on—if it remains strong, that’s always positive news for commercial property owners with manufacturing tenants. The good news here is that productivity showed a annual rate increase of 6.2% for the fourth quarter. Labor costs fell by 4.4%.
Good news also on the unemployment front where the national rate fell to 9.7% in January versus 10% in December. At the same time, 20,000 jobs were lost, but bad as that is, it’s still better than the 150,000 jobs lost in December.
Michael Prochelo is President of Financial Management Group, A Los Angeles based boutique business management and real estate investment company helping individuals and families secure and maintain their financial future. Information on Financial Management group can be found on Zoliath.com.