Last Week’s Economic News in Review February 10, 2021

February 10, 2021

Construction spending continued to grow, while employment saw slightly improved performance. Meanwhile, layoffs declined but remained at very high levels.

Construction Spending

Construction spending rose to an annual rate of $1.49 trillion in December, which was 1 percent over November’s rate of $1.475 trillion, according to last week’s report from the Census Bureau.

Compared to the same period a year ago, December’s construction spending was 5.7 percent higher than December 2019’s pace of $1.41 trillion. All told, the value of construction in 2020 was $1.429 trillion, which was 4.7 percent greater than the $1.365 trillion spent in 2019.

Looking at spending on new home construction, December’s residential construction spending grew to an annual rate of $691 billion, which was 4.7 percent higher than November’s pace of $670.1 billion. When compared to the same period a year ago, December’s construction spending on housing was a whopping 20.7 percent higher than December 2019’s rate of $572.3 billion.

Outlays on the construction of new single-family homes in December rose to an annual rate of $365 billion, which was 5.8 percent higher than November’s rate of $345.1 billion. Spending on construction of new multi-family housing grew to an annual rate of $91.3 billion in December, which was 0.1 percent higher than November’s rate of $91.2 billion.

Employment Situation

The U.S. economy ticked up a scant 49,000 jobs in January, the Bureau of Labor Statistics reported last week. Key job-growth categories included professional and business services, as well as public and private education, while job-loss sectors included leisure and hospitality, retail trade, healthcare, transportation and warehousing. January’s entire jobs report was just slightly off of economists’ expectations of 50,000.

The unemployment rate dipped 0.4 percentage points to 6.3 percent in January, with the total unemployed population for the month declined to 10.1 million people. Both January’s unemployment rate and population remain roughly double their February 2020 levels of 3.5 percent and 5.7 million people, respectively.

The population of long-term unemployed people – those who haven’t had jobs for 27 weeks or longer – was unchanged at 4 million people in January. This represented 39.5 percent of the total unemployed population.

All told, while the report showed some indications of turnaround, it was weak at best.

“There’s very little to celebrate in this report,” ZipRecruiter Labor Economist Julia Pollak told the New York Times. “Almost every measure that I was hoping would point in the right direction disappointed.”

Initial Jobless Claims

First-time claims for unemployment benefits filed by recently unemployed Americans during the week ending January 30th declined to 779,000, which was 33,000 claims down from the preceding week’s revised total of 812,000, the Employment and Training Administration reported last week.

The four-week moving average – regarded as a more reliable measure of jobless claims – fell to 848,250 claims, which was 1,250 claims over the previous week’s revised average of 849,500.

“These numbers were slightly encouraging,” Oxford Economics’ Chief U.S. Economist Gregory Daco told the New York Times. “While still alarmingly high, it’s better than the spike that occurred at the beginning of January.”

This week, we can expect:

Wednesday – Consumer prices for January from the Bureau of Economic Analysis; wholesale inventories for December from the Census Bureau; the Federal Budget for January from the Treasury Department.

Thursday – Initial jobless claims for last week from the Employment and Training Administration.

Friday – Consumer sentiment for February from the University of Michigan Surveys of Consumers.

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Omar Khamisa
Mission San Jose Mortgage
2111 W. March Lane, Suite B100
Stockton, CA 95207
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