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Time to measure nation’s vital economic signs

Denver Business JournalOn the Money
From the August 3, 2007 print edition

A healthy human body has certain vital signs that are essential for life. Heart rate, blood pressure, respiration and temperature are the critical indicators of survival, the vital signs.

Economics and finance have vital signs of their own, called “indicators.” While almost any activity or relationship — such as the presidential approval rating versus stock prices — can be used as an indicator, the core information is collected and dispassionately provided by the U.S. Census Bureau. Although indicators often are used to build forecasts, the Census Bureau’s job is to simply collect, report and compare.

Here are the 10 core indicators with their latest results:

  1. Housing starts/building permits — They provide statistics on the construction of new, privately owned residential structures in the United States. The statistics are for new housing units intended for occupancy and maintained by the occupants. The measure doesn’t include hotels, motels and group residential structures such as nursing homes and college dormitories.Housing starts in June were at a seasonally adjusted annual rate of 1,467,000, which was 2.3 percent above May.
  2. New home sales — Information includes the number of: (1) new single-family houses sold; (2) new single-family houses for sale; and (3) the median and average sales prices of new homes sold. Excluded are “HUD-code” manufactured (mobile) home units.In May, the seasonally adjusted annual rate was 915,000, which was 1.6 percent below the revised April figure of 930,000.
  3. Homeownership — This data comes from the monthly samples of the Housing Vacancy Survey, which is a supplement to the Current Population Survey. For example, the homeownership rate in the first quarter of 2007 was 68.4 percent, close to the 68.5 percent of the first quarter of 2006.
  4. Construction spending — A sophisticated set of calculations, the report uses construction costs of new single-family houses started each month from the U.S. Census Bureau’s Survey of Construction, then distributed into monthly values by applying patterns of monthly construction progress.The data is subsequently weighted and adjusted for multifamily houses, improvements, private nonresidential construction, and special architectural and engineering costs.Total construction activity for May was annualized at $1.17 trillion, 0.9 percent above the revised April annualized activity of $1.16 trillion.
  5. Manufacturing and trade inventories and sales — Provides data on the dollar value of retail sales, value of end-of-month inventories, and the dollar values of merchant wholesaler’s sales and end-of-month inventories.U.S. total business sales for May were an annualized $1.1 trillion, up 1.3 percent from April. Month-end inventories were an annualized $1.4 trillion, up 0.5 percent from the previous month.
  6. U.S. international trade in goods and services — This is an estimate of goods and services entering the United States from foreign countries. Valuable competitive details are included in this report.The nation’s international deficit in goods and services increased to $60 billion in May from $58.7 billion in April. In other words, imports increased more than exports.
  7. Quarterly financial report, retail trade — Corporations provide standard income statement and balance sheet data consolidated for all majority-owned domestic enterprises, except banking, insurance and finance.After-tax profits for retail corporations with assets greater than $50 million averaged 3.2 cents per dollar of sales for the first quarter of 2007, down 0.7 cent from the average of 3.9 cents in the preceding quarter.
  8. Manufacturers’ shipments, inventories and orders — Provides statistics on manufacturers’ value of shipments, new orders (net of cancellations), end-of-month order backlog (unfilled orders), end-of-month total inventory, materials and supplies, work in process and finished goods inventories. This indicator uses the six-digit North American Industry Classification System (NAICS).New orders for manufactured goods in May decreased $2.1 billion (0.5 percent) to $416.9 billion.
  9. Quarterly services survey — Primarily a presentation of revenue for selected NAICS code prefixes, such as health care, professional, technical and waste remediation services.
  10. Quarterly financial report (QFR) — The intent of this indicator is to provide up-to-date aggregate statistics on the financial position of U.S. corporations.

The QFR presents estimated statements of income and retained earnings, balance sheets, and related financial and operating ratios for manufacturing corporations with assets of more than $250,000. Mining, wholesale trade and retail trade corporations with assets of more than $50 million also are included.

Manufacturing corporations’ seasonally adjusted after-tax profits averaged 8.1 cents per dollar of sales for the first quarter of 2007, up 0.3 cent from 7.8 cents for the fourth quarter of 2006.

These indicators are published via press releases at various times during the year. The reports are available, along with historical data and charts, on the Web at www.census.gov/cgi-bin/briefroom/BriefRm. 

For more information about Business and Industry Census Bureau Economic Programs, visit www.census.gov/econ/www/.

© C. Stephen Guyer for American City Business Journals Inc. All rights reserved.