Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses the ISM manufacturing index and construction spending.

  • Today’s report from the ISM on the manufacturing sector was a disappointment following several flat months.  However, the overall index eased slightly, employment was flat and indicated expansion, while the index for new orders jumped nearly three full points to 52.4.  This is the first month in four that the index for new orders was above the critical 50 mark which indicates expansion.
  • Also, the index for prices paid (costs) showed a sharp decline which should help producers to buffer against reductions in workforce or even to expand.
  • Construction spending was also modestly upward.  Interestingly, residential construction led the headline index upward by 0.2% between August and September with a 0.9% increase over this same period.  Private non-residential construction rose 0.4%, while public construction slipped 0.6%.  Both single-family and multifamily construction rose this month.  Single-family construction has developed in pockets around the country where the supply of adequate housing no longer meets all sectors of demand.  New multi-family construction has been on the rise for some time, a trend that was no doubt driven by strong rental growth in recent months and projections for the same over the next several years.
  • Overall today’s news was positive.  The manufacturing sector which played a crucial role in driving the economy out of the recent recession and has been a buoy for many markets across the country appears to be building steam.  Furthermore, construction is a jobs-heaving industry so an expansion there is a positive sign for the economy.
  • While residential inventories may be an issue in some markets, in others there is a dearth of adequate homes for sale at some price points and the rental market is likely to need more inventory to meet growing demand.  Jobs are critical to confidence and the housing recovery.