Economist's Commentary: September 2, 2008

Quick Take on the Economy: September 2, 2008

By Lawrence Yun, NAR Chief Economist

Manufacturing activity remains close to the neutral mark according to the latest reading from the Institute of Supply Management. The August reading of 49.9 was a hair off the 50 reading from the previous month.
The 50 mark indicates neither expansion nor subtraction in the sector. For the overall economy, any reading above about 48 has been consistent with the expanding economy.
Production was modestly positive. Export orders were very high. Employment in the sector was neutral.

The number of construction completions dropped in July. Private residential spending fell (no surprise given that homebuilders are cutting back). Private non-residential spending, which had held up well, also fell in the latest month. It was the first decline in seven months for activity in offices, warehouses, and other private commercial real estate construction.
Expect continued declines in overall construction spending over the next six months.

Hurricane Gustav did not cause any notable major damages to Gulf oil platforms. Oil prices have fallen as a result - to $108 per barrel as of this writing.
The oil price is well off the near $150 mark of a few months ago. Falling oil prices lift economic projections.

The economy is in slightly better shape to continue expanding. Job creation could soon follow.
Falling oil prices will provide relief to U.S. consumers, while lowering wealth transfer to oil-producing countries like Russia, Venezuela, Saudi Arabia, and Iran.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

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