Construction spending grew, while the economy lost jobs and layoffs declined.
Construction spending rose to an annual rate of $1.459 trillion in November, which was 0.9 percent over October’s rate of $1.446 trillion, according to last week’s report from the Census Bureau. Compared to the same period a year ago, November’s construction spending was 3.8 percent higher than November 2019’s pace of $1.405 trillion.
Looking at housing, November’s residential construction grew to an annual rate of $658.1 billion, which was 2.7 percent higher than October’s pace of $641 billion.
Outlays on the construction of new single-family homes in November expanded to an annual rate of $341.5 billion, which was 5.1 percent higher than October’s rate of $324.8 billion. Spending on construction of new multi-family housing grew to an annual rate of $90 billion in November, which was unchanged from October’s rate of $90 billion.
Overall, this was good news for the housing sector, which needs more inventory in order to control housing costs while meeting demand.
The U.S. economy lost 140,000 jobs in December, the Bureau of Labor Statistics reported last week. Key job-loss categories included leisure, hospitality and private education, while job-growth sectors included professional and business services, retail trade and construction.
The unemployment rate held at 6.7 percent in December, with the total unemployed population for the month also unchanged at 10.7 million people. Both December’s unemployment rate and population remain roughly double their respective February levels of 3.5 percent and 5.8 million people.
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 December. This represented 37.1 percent of the total unemployed population.
December’s entire jobs report was well off the from the prior month’s performance, as well as economists’ expectations. November added 336,000 jobs, and economists had expected an increase of 50,000 jobs for December.
“It’s a really vivid demonstration that the labor market can’t bounce back in any sustainable form until the pandemic is under control,” Nick Bunker, head of North American research for the career site Indeed.com, told the New York Times.
Initial Jobless Claims
In related news, first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending January 2nd ticked down to 787,000, which was 3,000 claims lower than the preceding week’s total of 790,000, the Employment and Training Administration reported last week.
The four-week moving average – regarded as a more reliable measure of jobless claims – declined to 818,750 claims, which was 18,750 claims down from the previous week’s average of 837,500.
For workers that are jobless, Congress’s recently passed aid package should help with its increased unemployment benefits, but the winter “is going to be very difficult” for those seeking jobs, according to Kathy Bostjancic, chief U.S. financial economist at Oxford Economics, who spoke to the New York Times.
“Employers are very cautious about rehiring at the same time they have had to increase layoffs,” Bostjancic told the Times, “but the resurgence of the virus is really the main culprit here.”
This week, we can expect:
Wednesday – Consumer prices for December from the Bureau of Labor statistics; the federal budget for December from the Treasury Department.
Thursday – Initial jobless claims for last week from the Employment and Training Administration; import price index for December from the Bureau of Labor Statistics.
Friday – Retail sales for December and business inventories for November from the Census Bureau; industrial production and capacity utilization for December from the Federal Reserve; consumer sentiment for January from the University of Michigan’s Surveys of Consumers.
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