Home Sales Rise
US home sales rose in October to their highest level in more than nine and a half years according to the National Association of Realtors. The increase comes “amid pent-up demand, offering more evidence of a pickup in economic growth in the fourth quarter, but a recent surge in mortgage rates could slow housing market activity. The NAR said existing home sales increased 2.0 percent to an annual rate of 5.6 million units last month, the highest level since February 2007. Meanwhile, September’s sales pace was revised up to 5.49 million units from the previously reported 5.47 million units.
Record Economic Expansion
Deutsche Bank AG sees it as increasingly likely that President-elect Trump “will preside over a continuing US expansion that could take its place as the longest among American business cycles.” Chief US Equity Strategist David Bianco predicts that by the time Trump takes office, “the S&P 500 Index will eclipse 2,250.” Bianco writes that investors under-appreciate the “much higher chance now of a long lasting economic expansion that rivals the 10 year US record. ... We’re more confident now that the S&P will reach 2,500 in 2018 before suffering its next bear market.”
Vehicle Age Climbs
US drivers “are holding on to their vehicles for longer, and after-market car industries, such as parts manufacturers and suppliers, are expected to benefit.” The average age of light vehicles in operation in the US “climbed to 11.6 years, according to research firm IHS Markit. In addition, registrations for light vehicles in operation reached “a record of more than 264 million registrations – an increase of more than 6.2 million, or 2.4%, since last year.”
Wood fiber costs for pulpmills in Canada and the US have fallen over the past year as a result of higher availability of residual chips from the continent’s sawmills, reports the North American Wood Fiber Review. The biggest price declines have been in the US Northwest and Northeast regions, but prices have also fallen quite dramatically throughout Canada. North American wood fiber prices have trended downward for most of 2015 and 2016 with prices in the 3Q/16 being at their lowest levels in over two years, according to the North American Wood Fiber Review
Bipartisan support for corporate tax reform “has been growing,” and although President-elect Donald Trump and House Republicans have different tax plans, both would lower corporate tax rates – the House plan from 35 percent to 20 percent, and Trump’s from 35 percent to 15 percent. NAM Vice President of Tax and Domestic Economic Policy Dorothy Coleman says the National Association of Manufacturers wants a tax plan that adopts “a ‘modern, competitive’ territorial system, and a permanent R&D credit” among other items.
Right-to-work in Constitution
Alabama voters approved 14 proposed constitutional amendments on the ballot. As a result, the right to work/union membership will be written into the Alabama Constitution enshrining an already existing right to work law, which will mean that “employers cannot require employees to join unions or pay union dues.” In addition, voters approved an amendment to create manufacturing zones throughout the state, allowing cities and counties “to sell certain property they own for less than its fair market value if it is located in areas specially designated as suitable for certain major manufacturing facilities.”
China Auto Sales Rose
China’s auto sales increased 20.3 percent in October from a year earlier, “propelled by surging demand for sport utility vehicles.” While dealers sold 2.3 million cars, minivans and SUVs, the China Association of Automobile Manufacturers said, total vehicle sales including trucks and buses “climbed 18.6 percent to 2.6 million units.” October’s SUV sales were up 43.3 percent over a year earlier to 896,000 units. Sales slowed slightly from September “to end a five-month streak of strengthening sales, the China Association of Automobile Manufacturers.” The slow pace of growth is attributed to tapered consumer interest in the government’s purchase tax incentive that allowed consumers to save up to 10,000 yuan on vehicle purchases.
Denver Wants Electric Cars
The city of Denver “plans to add 200 plug-in electric vehicles to its fleet by 2020.” The city said it will “start replacing its out-of-service cars with the more sustainable alternative in 2018,” according to Denver DEH Energy and Transportation Administrator Tyler Svitak, energy and transportation administrator with Denver’s Department of Environmental Health.
The Commerce Department said that US durable goods orders rose 4.8% in October, while non-defense capital goods orders excluding aircraft rose 0.4 percent.
Rising Healthcare Costs
The rising cost of healthcare for manufacturing companies is chief among their concerns. The article featured a NAM (National Association of Manufacturers) study that says the average annual cost of a family health insurance plan in the manufacturing sector “increased from $6,549 in 2000 to $16,538 in 2014.” Company executives “don’t want to remove health care coverage for their employees, but they’re asking for more affordable options and less red tape.” The NAM study also concluded “that new rules recently implemented by the U.S. Department of Labor will result in $81.6 billion in compliance costs over the next 10 years, including roughly $4.2 billion this year, four times the amount in 2015.”
NAM Senior Director of Tax Policy Carolyn Lee says small businesses – which are often family owned – “are responsible for 62 percent of the country’s employment and $5.9 trillion of the nation’s GDP.” She adds that family-owned businesses in the manufacturing sector “are key to our nation’s supply chain” and create millions of well-paying jobs. For this reason, the National Association of Manufacturers “has long supported the goal of repealing” the estate tax (or “death tax”) on family-owned businesses. The NAM has led the business community “in pushing back against a proposed rule from the Treasury Department released in August that would reduce the ability of families to pass their company on to the next generation.” In particular, manufacturers “are concerned that the proposed regulations would severely restrict the availability of well-established minority valuation discounts in intra-family transfers of family-owned enterprises.”
Rule Not Necessary
A broad coalition of industry groups including the National Association of Manufacturers asked the US Court of Appeals for the DC Circuit on Friday “to strike down a federal rule for workplace exposure to silica dust, claiming that regulators failed to show the new requirements are necessary to protect workers, affordable for some businesses to implement or that compliance is technically feasible in certain industries.”
The average interest rate on US 30-year fixed-rate mortgages “rose above 4 percent to a 16-month high, in step with rising U.S. government bond yields, mortgage finance agency Freddie Mac said. In addition, average rates on 15-year fixed mortgages “rose to their highest since early January, while average five-year adjustable loan rates reached their highest since April 2014.”