April 7, 2021
Construction spending declined slightly, while the economy saw a large increase in new jobs. That said, weekly layoffs did increase, as well.
The big topic on every housing market watcher’s mind is housing inventory, and spending on the construction of housing saw a small decline in February, but spending on the construction of new single-family homes held steady.
Construction spending dipped to an annual rate of $1.51 trillion for the month, which was 0.8 percent below January’s rate of $1.52 trillion, according to last week’s report from the Census Bureau. Compared to the same period a year ago, February’s construction spending was 5.3 percent higher than February 2020’s pace of $1.44 trillion.
Looking at spending on new home construction, February’s residential construction spending skirted down to an annual rate of $717.9 billion, which was 0.2 percent down from January’s pace of $719.3 billion. However, when compared to the same period a year ago, February’s construction spending on housing was an encouraging 21.1 percent higher than February 2020’s rate of $592.9 billion.
Outlays on the construction of new single-family homes in February ticked up to an annual rate of $376.7 billion, which was 0.1 percent higher than January’s rate of $376.4 billion. Spending on construction of new multi-family housing dipped to an annual rate of $93.1 billion in February, which was 1.4 percent lower than January’s rate of $94.4 billion.
The U.S. economy saw a solid jump of 916,000 jobs in March, the Bureau of Labor Statistics reported last week. Key job-growth categories included leisure and hospitality, public and private education, and construction. March’s employment expansion completely outpaced economists’ expectations of 675,000 new jobs.
“These improvements in the labor market reflect the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic,” the Bureau noted in comments accompanying its day.
This pushed the unemployment rate down to 6.0 percent in January, with the total unemployed population for the month dipping to 9.7 million people. While the solid improvement is welcome, both March’s unemployment rate and population remain much higher 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 – ticked up to 4.2 million people in January. This now represents 43.4 percent of the total unemployed population.
Initial Jobless Claims
In related news, initial jobless claims filed by recently unemployed Americans during the week ending March 27 grew to 719,000, an increase of 61,000 claims from the previous week’s 658,000 claims, the Employment and Training Administration reported last week.
This was higher than economists’ expectations of a much smaller increase to 675,000 claims, but the unexpected jolt upwards was likely transitory.
“Job growth will accelerate dramatically in coming months as the U.S. reaches herd immunity and the high-contact service sector revives,” PNC Financial Services senior economist Bill Adams told MarketWatch.
The four-week moving average, which is considered a more stable measure of jobless claims, fell to 719,000, which was 10,500 claims down from the preceding week’s average of 729,500 claims.
This week, we can expect:
Monday – Factory orders for February from the Census Bureau.
Wednesday – Consumer credit for February from the Federal Reserve; trade deficit for February from the Census Bureau.
Thursday – Initial jobless claims for last week from the Employment and Training Administration.
Friday – Producer prices for March from the Bureau of Labor Statistics; wholesale inventories for February from the Census Bureau.
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