After seven and a half years of expansion, the economy is still chugging along. In fact, 2016 is drawing to a close with some of the strongest indicators of the year. Most notably, last week third-quarter GDP was revised upward to an annualized rate of 3.2%, its highest quarterly pace in two years, as corporate earnings and exports surged to join consumers in driving the economy forward.
Growth has continued into the fourth quarter with the Federal Reserve’s latest “Beige Book” reporting that “the economy continued to expand across most regions from early October through mid-November.”
Meanwhile, the Purchasing Managers’ Indexes (PMIs) for manufacturing and services continue to improve. Thecomposite manufacturing index grew at its fastest pace since June, with particular strength in the production component, while the services-oriented non-manufacturing index grew at its fastest rate in over a year.
On another positive note for the economy and property markets, the unemployment rate fell to 4.6% in November, its lowest rate in nine years, on the strength of 178,000 new payroll jobs. One downside to the strong jobs report, though: Wage growth fell 0.1% last month—not a material decline, but an unwelcome move in the wrong direction.
Conditions continued to firm in the housing market, too. As measured by the Case-Shiller index, the average price of single-family homes nationally finally reached a new peak in October (latest data available), although the big city indexes still lag their 2006 peaks. These gains came on top of a 25% jump in housing starts in October, the highest pace since August 2007, and a clear sign that homebuilders are ramping up construction to meet rising demand.
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Thank you to Andrew Nelson for sharing this blog to Colliers Knowledge Leader! Andrew is the U.S. Chief Economist for Colliers International, where he provides thought leadership about commercial real estate, capital markets, financial investment and related sectors. He’s held a variety of leadership roles in both the public and private sectors.
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