Economy Watch: Industrial Production Surpasses ’07 Level; SoCal Residential Sales Ease Off; Senate Likely to Pass Budget Bill
- Dec 17, 2013
The Federal Reserve reported that U.S. industrial production increased 1.1 percent in November, compared with a decline of 0.1 percent in October. The gain in November was the largest since November 2012, when production rose 1.3 percent. At 101.3 percent of its 2007 average, total industrial production in November 2013 was 3.2 percent above a year ago.
Manufacturing output increased 0.6 percent in November, for its fourth consecutive monthly gain. Production at mines advanced 1.7 percent to more than reverse a decline of 1.5 percent in October, while the index for utilities was up 3.9 percent in November, as colder-than-average temperatures boosted demand for heating.
The November 2013 level put industrial production above its pre-recession peak of December 2007 for the first time, and 21 percent above its trough of June 2009. Capacity utilization for the industrial sector increased 0.8 percentage points in November to 79 percent, which is 1.2 percentage points below its long-run (1972-2012) average.
SoCal Residential Sales Ease Off
Real estate information specialist DataQuick reported on Monday that Southern California – a bellwether market in the housing industry – experienced a year-over-year drop in residential sales in November, hinting that the recent run-up in sales and prices might not be a bubble. The decline came as investor activity waned and buyers continued to struggle with higher prices and a thin supply of properties for sale.
A total of 17,283 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month, San Diego-based DataQuick said. That was down 14.2 percent from October, and down 10.4 percent from November 2012. Last month’s sales were also 19.8 percent below the average number of sales in the month of November.
Foreclosure resales – homes foreclosed on in the prior 12 months – accounted for 6.3 percent of the SoCal resale market in November. That was the same as in October and down from 15.4 percent a year earlier. The October/November foreclosure resale rate, according to DataQuick, was the lowest since May 2007, when it was 5.5 percent. In the current cycle, foreclosure resales hit a high of 56.7 percent in February 2009.
Senate Likely to Pass Budget Bill
The U.S. Senate seemed poised this week to approve the budget measure passed by the U.S. House of Representatives recently, which would undo some of the harsher effects of the sequester, and forestall another federal government shutdown early next year. The bill might be modest, but it could also mitigate (for the time being) one of the persistent downside risks to the U.S. economy, namely counterproductive fiscal policy (or rather, non-policy) by Congress.
Wall Street shook off its doldrums on Monday, with the Dow Jones Industrial Average gaining 129.21 points, or 0.82 percent. The S&P 500 was up 0.63 percent and the Nasdaq advanced 0.71 percent.