Last Week’s Economic News in Review
Construction spending suffered its largest monthly drop in more than a year, while unemployment declined slightly, and layoffs notched up.
Construction spending for June fell to an annual rate of $1.31 trillion, a 1.1 percent drop from May’s rate of $1.33 trillion, the Census Bureau reported last week. This marked the biggest monthly decline in construction spending since April 2017. That said, compared to last year, June’s spending was 6.1 percent higher than June 2017’s pace of $1.241 trillion.
Residential construction for June dipped to an annual rate of $568.3 billion, which was 0.5 percent below May’s rate of $570.9 billion. Spending on construction of single-family homes in June fell 0.4 from May to a rate of $287.4 billion. Spending on multi-family units in June dropped 2.8 percent from May to a pace of $59.8 billion.
For a housing market eager to add inventory, a drop in residential spending wasn’t welcome news. Moreover, it was a weak follow-up to the previous week’s report that housing starts had dropped to a nine-month low.
“This is in line with the soft readings of single-family and multifamily housing starts in June,” a statement from the National Association of Home Builders read. That said, NAHB added that, on a quarterly basis, private residential construction spending had climbed four percent in the second quarter.
The economy added 157,000 jobs in July, with key growth sectors being professional and business services, manufacturing, healthcare, and social assistance, the Bureau of Labor Statistics reported last week. This pushed the unemployment rate to decline by 0.1 percent to 3.9 percent, with the number of unemployed persons falling by 284,000 to 6.3 million.
Average hourly earnings for all employees rose by seven cents in July to hit $27.05. Over the past 12 months, average hourly earnings have grown by 71 cents, or 2.7 percent. Average hourly earnings of production and nonsupervisory employees grew by three cents to $22.65 for the month.
The number of Americans unemployed on a long-term basis (27 weeks or longer) hovered at 1.4 million in July, accounting for 22.7 percent of the total unemployed population. The labor force participation rate – the percentage of employable Americans either working or actively looking for work – was unchanged at 62.9 percent for July.
Initial Jobless Claims
First-time claims for unemployment benefits filed by the newly unemployed during the week ending July 28 ticked up slightly to 218,000, a gain of 1,000 claims over the prior week’s total of 217,000, according to last week’s report from the Employment and Training Administration. This was less than economists’ expectations of a rise to 220,000.
The four-week moving average, which is considered a more stable measure of jobless claims, fell to 214,500, a drop of 3,500 claims from the preceding week’s average of 223,250 claims.
The latest report marked the 178th straight week that initial claims have come in below the 300,000-claim level, which economists consider an indicator of a growing job market.
This week, we can expect:
- Monday – Consumer expectations for July from The Conference Board.
- Tuesday – Consumer credit for June from the Federal Reserve.
- Thursday – Producer prices for July from the Bureau of Labor Statistics; wholesale inventories for June from the Census Bureau; initial jobless claims from the Employment and Training Administration.
- Friday – Consumer prices for July from the Bureau of Labor Statistics; federal budget for July from the Treasury Department.