March 10, 2021
Construction spending hit a record high while employment improved. That said, the long-term unemployed population remained high, and layoffs ticked up.
Construction spending rose to an annual rate of $1.52 trillion in January, which was 1.7 percent over December’s revised rate of $1.49 trillion, according to last week’s report from the Census Bureau. This was the highest level for construction spending since the Census Bureau began tracking the metric in 2002.
January’s spending also outpaced economists’ forecasts of a 0.8 percent gain, and when compared to the same period a year ago, January’s construction spending was 5.8 percent higher than January 2020’s pace of $1.43 trillion.
Looking at spending on new home construction, January’s residential construction spending grew to an annual rate of $713 billion, which was 2.5 percent higher than December’s pace of $695.7 billion. When compared to the same period a year ago, January’s construction spending on housing was a solid 21.1 percent higher than January 2020’s rate of $596.7 billion. (This followed a 20.7 percent year-over-year gain in December.)
Outlays on the construction of new single-family homes in January rose to an annual rate of $376.1 billion, which was 3 percent higher than December’s rate of $365.1 billion. Spending on construction of new multi-family housing grew to an annual rate of $92.6 billion in January, which was 0.7 percent higher than November’s rate of $92 billion.
Again, the prevailing trend is a rush to create enough inventory to meet the unyielding demand for housing, which continues to keep home prices at high levels.
The U.S. economy added 379,000 jobs in February, the Bureau of Labor Statistics reported last week. This was well above forecasts of 210,000 jobs. The major job-growth category for February was leisure and hospitality, with lighter gains benefitting temporary help services, healthcare, social assistance, retail trade, and manufacturing.
The unemployment rate dipped 0.1 percentage points to 6.2 percent in February, with the total unemployed population for the month down slightly to 10 million people. While both January’s unemployment rate and population are well below their April 2020 peak, they are a little less than double their February 2020 levels of 3.5 percent and 5.7 million people, respectively.
The big concern is the population of long-term unemployed people – those who haven’t had jobs for 27 weeks or longer – was unchanged at 4.1 million people in February. This represented 41.5 percent of the total unemployed population. This is up from 39.5 percent in January.
“We’re still in a pandemic economy,” MacroPolicy Perspectives Founder Julia Coronado told the New York Times. “Millions of people are looking for work and willing to work, but they are constrained from working.”
Initial Jobless Claims
Where layoffs are concerned, first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending February 27th rose to a four-week high of 745,000, which was 9,000 claims down from the preceding week’s revised total of 736,000, the Employment and Training Administration reported last week.
That said, the four-week moving average – regarded as a more reliable measure of jobless claims – fell to 790,750 claims, which was 16,750 claims below the previous week’s revised average of 807,500.
Job market watchers reported they were expecting an increase after last week’s sizable drop.
“We knew there was some backlog in Texas, and claims would likely go back up,” Oxford Economics’ Chief U.S. Economist Gregory Daco told the New York Times. “Despite expectations for record-breaking growth in 2021, the job market is still quite fragile.”
This week, we can expect:
Monday – Wholesale inventories for January from the Census Bureau.
Wednesday – Consumer prices for February from the Bureau of Labor Statistics.
Thursday – Initial jobless claims for last week from the Employment and Training Administration.
Friday – Producer prices for February from the Bureau of Labor Statistics; consumer sentiment for March from the University of Michigan’s Surveys of Consumers.
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