Two Sides of Recovery: Shipping Up, Housing Down
Two barometers of the US economy are moving in different directions, sending mixed messages about the depth, breadth and speed of the recovery.
While housing is faltering (in part because the federal home-buyer tax credit has now expired), shipping is rebounding—a sure sign that retailers are betting on increased consumer spending in the months to come.
On the housing front, the Mortgage Bankers Associationreported Wednesday that applications to buy homes fell to a 13-year low, dropping 3.1 percent in the last week and refinancing applications fell 2.9 percent, in spite of 30-year fixed rates hitting a low.
Also on Wednesday, Goldman Sachs downgraded the homebuilding sector to neutral. The PHLX Housing Sector Index , a clutch of homebuilding and building material stocks, has fallen 22 percent since the end of April, when the tax credit ended.
Yet, while retail sales slowed in May and June, shippers and ports and shipbuilders are largely on the upswing.
According to PIERS Global Intelligence Solutions, container ship trade in the US year-to-date, January through May, is up 12 percent over last year.
Both FedEx and UPS , which a BB&T analyst recently upgraded, are planning expansions. In anticipation of stronger demand, especially out of Asia, FedEx has scheduled an increase pilot work hours to pre-recession levels. And both shippers plan to add planes to their Asian networks.
The Port of Los Angeles, the nation’s busiest seaport, had its most active June in history for cargo, surpassing the number of container ships that moved through the area during the height of the global economic boom, and the neighboring Port of Long Beach also showed a brisk rise in imports, reported the Los Angeles Times.
As an aside, at the Los Angeles and Long Beach ports clerical workers returned to work Monday, according to the AP, after an 11-day strike. Twice, the workers there attempted to shut down loading and unloading operations by staging picket lines and persuading members of the International Longshore Warehouse Union to stay away from the docks.
Meanwhile, manufacturing of container ships has surged recently, according to the Journal of Commerce, contributing to a near 10 percent growth in the global fleet in 2010.