US economic wrap up for May 2005

US economic wrap up for May 2005

The tale of the tape for the US economy recently is homes, homes, and more homes. Sales of new US homes remain at its highest rate ever. The National Association of Realtors reported that turnover of new home rose 4.5% to over 7 million while the median sales price rose 3.8% year on year to about $231'000. Regionally, sales skyrocketed 37.2% in the Northeast and 2.8% in the West. Sales in the South fell 5.3% and 0.5% in the Midwest. Meanwhile in other news, economists were heartened to find out their predictions for May's consumer confidence were way off. In fact, instead of declining from April's revised figure of 97.5, Consumer Confidence actually increased to 102.2 in May. Rounding out the recent spate of good news, confidence in job seekers also increased. Figures reported those expecting more jobs to become available climbed nearly one percent to 14.9%. While those expecting fewer jobs dipped 2.5% to 15.9%. Overall unemployment is estimated to have remained unchanged at 5.2%. Other figures reported for May: The Manufacturing Index estimates are at about 51.5% which is a decline from 55.3% in April. Durable Goods for April rose 1.9%, reversing a four month decrease due in large to renewed demand for machinery, computers, and aircraft. Auto Sales Pace is estimated to have declined slightly 0.8% to 16.7 million. Reports are that the dollar is still showing signs of strengthening. News of France's rejection of the proposed EU Constitution sent the euro down sharply. Since Sunday's vote, the euro has slipped 1.5% to $1.23. News of the bullish dollar sent oil futures down with US July crude dipping $0.35 to $51.50. US inventories are swelling near 6-year highs as OPEC continues to pump at maximum capacity and in terms of the impending summer driving season, gasoline inventories are in excellent shape. This morning, Tuesday, May 31, was particularly hard on the markets as Midwest business data reported a hit in activity. For the month of April, The National Association of Purchasing Management-Chicago business barometer fell from 65.6 to 54.1. The Midwest news and the French/EU Constitution debacle overshadowed the otherwise sunny Consumer Confidence report and the stock markets all showed Tuesday drops. The decline ends the month on a sour note. For much of the past two weeks the stock markets have largely rallied. Last week the Dow ended up 0.7%, the S&P 500 0.8%, and the Nasdaq added 1.4%. All in all, much of the focus is, at least for this week, focused on Europe. It remains to be seen whether an expected no vote from the Netherlands will have any further impact on US markets. Moreover, it will be interesting to note how much further ground, if any, the dollar can make on the struggling euro.