Last Week’s Economic News in Review
Construction spending was mostly flat, while the nation’s employment situation fared better than expected, and layoffs declined.
Construction spending for September hovered at an annual rate of $1.329 trillion, barely changed from August’s pace of $1.328 trillion, the Census Bureau reported last week. Compared to the same period a year ago, September’s spending was 7.2 percent higher than September 2017’s rate of $1.24 trillion.
Spending on private construction hit an annual rate of $1.02 trillion, which was 0.3 percent higher than August’s pace of $1.016 trillion. Of that, residential construction notched up to an annual rate of $556.4 billion in September, which was 0.6 percent higher than August’s rate of $553.4 billion. That said, spending on single-family home construction actually fell 0.8 percent to an annual rate of $283.2 billion, while spending on construction of multi-family units was where the real growth occurred, expanding a solid 8.7 percent to a rate of $64.2 billion.
After seeing materials costs shoot up, builders caught a recent lucky break that will hopefully help them contain costs.
“The recent decline in lumber prices from record-high levels earlier this summer is also welcome relief, although builders still need to manage construction costs to keep homes competitively priced,” National Association of Home Builders Chairman Randy Noel told HousingWire.
The economy added 250,000 jobs in October, according to last week‘s report from the Bureau of Labor Statistics. This was well above market expectations of a 208,000-job gain. Key job growth sectors included healthcare, manufacturing, construction, transportation and warehousing.
This kept the unemployment rate hovering at 3.7 percent with the total number of unemployed Americans at 6.1 million. Since October 2017, the population of unemployed people has dropped by 0.4 percent, or 449,000 people.
So why continued job growth despite low unemployment? The job market is getting to the point where businesses are now starting to have difficulty finding people.
“Businesses have started relaxing their (hiring) standards,” Joel Naroff of Naroff Economic Advisors told USA Today. “They’re being more rational. That’s why we’re seeing sustained strong job growth.”
Average hourly earnings for all employees rose by five cents in October to $27.30. Since October 2017, average hourly earnings have grown by 83 cents (3.1 percent).
Initial Jobless Claims
Layoffs dropped with first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending October 27, falling to 214,000, a decline of 2,000 claims from the preceding week‘s total of 216,000 the Employment and Training Administration reported last week. This was slightly higher than economists’ expectations of claims dipping to 212,000 for the week.
The four-week moving average – regarded as a more reliable measure of initial jobless claims – increased to 213,750, a gain of 1,750 claims from the prior week‘s average of 212,000. This marked the 191st week in which initial claims were below the 300,000-claim level, which economists consider an indicator of a growing job market.
This week, we can expect:
- Wednesday – Consumer credit for September from the Federal Reserve.
- Thursday – Initial jobless claims for last week from the Employment and Training Administration.
- Friday – Producer Price Index for October from the Bureau of Labor Statistics; consumer sentiment for November from the University of Michigan Surveys of Consumers; wholesale inventories for September from the Census Bureau.