April 16, 2014

Home sales dip in February (AUDIO)

Winter has not been kind to Missouri’s real estate industry.  But the weather is not the only factor behind the slowdown. 

Missouri’s Realtors says home sales in February were down 17% from February of 2013 and 12%  below February of ’12.  But the time homes were on the market continued to decrease while the prices of homes that sold averaged six and eleven percent more than prices in the last two Februarys. 

CEO Russ Cofano says weather kept a lot of people from looking while increasing loan rates and tighter underwriting standards had an impact. But a slowdown in another industry also has hurt home sales.

Cofano says new home building has slowed, too. “Where there’s new home transactions, guess what?…People that are wanting a move-up, they’ll see that nice bright new home and want to buy and their home then becomes inventory.  So we’re desperately in need both in Missouri and across the country of new homes inventory.” 

Cofano says other years that have started slowly have picked up in March and anecdotal information indicates that’s starting to happen this year.  He thinks there is pent-up demand for quality homes but lack of good inventory is frustrating.

AUDIO: Cofano interview 10:41

Beef, pork, milk prices high and predicted to climb

Consumers anxious to get out and start the grilling season could be in for a shock at the cash register.

University of Missouri Agriculture Economist Scott Brown says the average price for choice beef increased four percent from January to February to a record $5.58 a pound, and he says signs point to continued increases in beef prices

“When you look at beef production, we’re likely going to be down four percent this year,” says Brown. “I think we’ve gotten to the point where we’re going to be critically low in terms of beef supplies in 2014.”

Brown says lower production isn’t the only factor, though. He says demand remains strong both in the U.S. and overseas, in spite of higher prices.

“Places like China could potentially really drive beef prices higher for us over the next year or two if they decide that they have an appetite for more U.S. beef products,” says Brown.

Pork prices are about 8-cents per pound off of record levels, and Brown says it won’t take much to close that gap. The porcine epidemic diarrhea virus (PEDV) that has impacted hog herds in 27 states doesn’t pose a threat to humans, but is reducing supplies and has driven hog prices to new records.

Brown says consumers might consider stocking up on pork now before prices climb.

“I suspect a lot of consumers going to the grocery store won’t find what they consider a lot of great bargains for pork products,” Brown tells Missourinet, but I would remind them as we go into the summer months I think they’re going to find a lot of these pork products are going to move substantially higher as well given where we are today.”

Milk prices at the farm level have also climbed to record levels, and Brown says that’s a very good situation for dairy producers who have endured several straight tough years. Brown says fluid milk and cheese prices will continue to increase.

“We could see another 20, 30 cents a gallon on fluid milk prices coming in the next couple of months,” says Brown, “and perhaps we’re going to hit record fluid milk prices for consumers in this country.”

Brown says the higher milk prices can also be attributed to high demand, much of it from outside the U.S.

“Places like China, Asia generally … very hungry for milk powders that the U.S. is able to supply,” says Brown. “Over 15-percent of our milk production now being exported … that has been the real driver for these record milk prices.”

Federal reserve says economy improving in Eastern Missouri

The St. Louis Federal Reserve says a February survey shows the majority of St. Louis area businesses expect local economic conditions will be better this year than last year. The percentage of respondents who expect conditions to worsen was significantly lower than three months earlier, according to a press release.

The Burgundy Books detail economic data for each of the St. Louis Fed’s four zones: St. Louis, Little Rock, Louisville and Memphis, including information collected from labor markets, manufacturing, real estate and construction, the household sector, banking and finance, and agriculture and natural resources.

View the entire St. Louis report at: http://research.stlouisfed.org/regecon/burgundybooks/14/03/BB0314StL.pdf

The St. Louis region covers 71 counties in eastern Missouri and 45 counties in southern Illinois, with a total population of about 5.6 million people. About 3 million people live in the St. Louis Metropolitan Statistical Area.

The St. Louis Federal Reserve says employment growth across the zone was mostly positive in the fourth quarter of 2013 compared with the previous year, and that unemployment dropped to 6.7 percent in the fourth quarter, its lowest level in five years.

Missouri and the St. Louis area added manufacturing jobs in the fourth quarter of 2013, but Illinois experienced a decline for the third consecutive quarter, the data shows. The residential housing and nonresidential property markets have also improved, showing the lowest vacancy rate in six years for the St. Louis area.

For the second straight quarter, growth of per capita personal income for Missouri and Illinois outpaced the nation’s growth, the St. Louis Fed reports, and mortgage and credit card balances have also decreased.

Missouri-Kansas “truce” bill clears senate (AUDIO)

Missouri’s peace offering to Kansas is halfway through the legislature–a proposal that sponsors hope ends the economic development border war between the two states.

Kansas City Senator Ryan Silvey’s bill sets up an eight-county “no poaching” zone–four counties in Missouri and four in Kansas. He says studies show the competition has not generated the jobs the states have hoped for, making the continued competition not worth the expense.

The bill gives Kansas two years to pass similar legislation or for the Governor to issue an executive order. 

Silvey says he has been talking to some Kansas legislators but, “They still need to be educated on the issue a little more.”    

Independence Senator Paul LeVota, a supporter of the truce, has told Silvey the proposal is an offer Kansas cannot afford to refuse.  “They have decimated their revenues so they’re not going to have any more money for incentives. They should be at your door thanking you for this because they aren’t going to  be able to compete anymore,”  he says. LeVotas says Kansas would be “foolish” not to take a similar step.

AUDIO: final debate 11:16

Gov. Nixon announces trade mission to Canada

Governor Jay Nixon (D) is headed to Canada.

The Governor has announced that he will lead a delegation of Missouri business leaders and state officials to the Great White North, Sunday through Thursday. In a statement, Nixon says Canada is Missouri’s largest export market and bought nearly $4-billion in goods from Missouri last year. Nixon will meet with business leaders in Montreal, Ottawa and Toronto.

Nixon says he will meet with the leadership of major Canadian corporations that have made or are considering making investments in Missouri. Those include Magna International, the parent company of Magna Seating in Excelsior Springs and LMV Automotive in Liberty. LMV supplies parts for the Ford Transit, being built in Claycomo.

“This trade mission is a great opportunity to expand foreign investment in our state,” Governor Nixon says in his statement. “We’ve seen how, particularly in the automotive sector, companies like Magna International are seeing Missouri as an increasingly attractive place to invest and create high-paying jobs.”

He will be joined by First Lady Georganne Nixon, Department of Economic Development Director Mike Downing, Department of Agriculture Director Richard Fordyce and representatives of Missouri businesses including Custom Metalcraft of Springfield, Essex Industries of St. Louis, Advantage Capital Partners and Kent Precision Foods Group, Inc. of St Louis.

Nixon will meet with government officials including the Minister of Industrial Policy in Quebec Elaine Zakaib, the Canadian Minister of International Trade, Ed Fast and the Premier of Ontario, Kathleen Wynn. He will also address Canadian trade and industry associations including the American Chambers of Commerce in Montreal, Toronto and Ottawa and the Montreal Board of Trade.

“Ninety-six percent of the world’s consumers live outside the United States, so in order to keep creating jobs here at home we need to do everything we can to reach new customers for Missouri-made products abroad,” Nixon says. “As Missouri’s number one export market, Canada offers tremendous opportunities for Missouri businesses and farmers. In fact, Canada purchased nearly $4 billion in Missouri goods last year alone – dollars that helped fuel our economy and bring our unemployment rate to a five and a half year low. The goal of this mission is simple: sell more products to Canada, and create more jobs in Missouri.”

The Governor, First Lady, and members of the delegation will arrive in Montreal on Sunday, March 2. The delegation will travel to Ottawa on Tuesday, March 4 and then to Toronto on Wednesday, March 5. The delegation will depart for Missouri on Thursday, March 6. Travel costs for Governor and Mrs. Nixon will be covered by the Hawthorn Foundation, a nonprofit organization dedicated to promoting economic growth in Missouri; state taxpayer funds will not be used.