Last Week’s Economic News in Review
Last week saw the release of many delayed economic reports thanks to the end of the 35-day government shutdown. We saw new home sales post gains, construction spending grow, employment increase, and layoffs see a considerable surge.
New Home Sales
Sales of new single-family homes shot up to an annual rate of 657,000 for November, marking a sizable 16.9 percent increase over October’s rate of 562,000, the Census Bureau and the Department of Housing and Urban Development reported last week. That said, when compared to the same period a year ago, November’s sales were 7.7 percent lower than November 2017’s pace of 712,000.
Looking at price, the average sales price for new homes sold during November came in at $362,400, and the median sales price was $302,400. Looking at supply, the estimated number of new homes for sale at the end of November totaled 330,000, representing a six-month supply at November’s sales rate.
It will be interesting to see if the new home sales report for December sees a stumble similar to the one we saw in existing home sales for that month, which was covered in the previous edition of Economic Advisor.
Construction spending during November hit an annual rate of $1.299 trillion, marking a 0.8 percent gain over October’s revised rate of $1.289 trillion, according to last week’s report from the Census Bureau. This beat economists’ forecasts of a 0.2 percent gain. Compared to the same period a year ago, November’s spending was 3.4 percent higher than November 2017’s pace of $1.257 trillion.
November’s growth in spending was mainly driven by an increase in housing construction. Residential construction spending grew to an annual rate of $542.5 billion during November, which was 3.5 percent higher than October’s revised rate of $524.2 billion.
However, spending on single-family home construction declined to a rate of $277.5 billion, which was 1.8 percent below October’s pace of $282.5 billion. Conversely, spending on construction of new multi-family housing grew to $64.7 billion in November, which was 2.6 percent higher than October’s rate of $63 billion.
The U.S. economy added 304,000 jobs in January, with key job-growth sectors including leisure and hospitality, construction, healthcare, transportation, and warehousing, the Bureau of Labor Statistics reported last week.
The unemployment rate ticked up slightly to four percent for the month, with the number of unemployed Americans totaling 6.5 million. The Bureau noted that the government shutdown likely contributed to the unemployment increase, given that, of the unemployed population for January, 175,000 reported being on temporary layoff.
January’s average hourly earnings increased by three cents to $27.56, a tapering in growth when compared to December’s 10-cent advance. Since January 2018, average hourly earnings have grown by 85 cents, or 3.2 percent.
Initial Jobless Claims
Looking at layoffs, first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending January 26 skyrocketed to 253,000, an eyebrow-raising increase of 53,000 claims from the preceding week’s total of 200,000, the Employment and Training Administration reported last week. Economists had anticipated an increase, but only to 216,000 claims.
While this was the highest level for jobless claims since September 30, 2017, it is believed that it is a temporary increase caused by filings from non-federal government workers who were temporarily laid off due to the government shutdown.
The four-week moving average, which is considered a more stable measure of jobless claims, grew to 220,250, an increase of 5,000 claims over the preceding week’s average of 215,250 claims.
The Administration’s latest report marked the 204th 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 should see:
- Monday – Factory orders for November from the Census Bureau.
- Wednesday – The balance of trade for November from the Census Bureau; labor productivity for the fourth quarter from the Bureau of Labor Statistics.
- Thursday – Initial jobless claims for last week from the Employment and Training Administration; consumer credit for December from the Federal Reserve.
- Friday – Wholesale inventories for December from the Census Bureau.