May 12, 2021
Construction spending saw moderate gains, while the economy added a less-than-anticipated number of jobs, and layoffs enjoyed solid declines.
Construction spending rose to an annual rate of $1.513 trillion in March, which was 0.2 percent over February’s rate of $1.509 trillion, according to last week’s report from the Census Bureau. Compared to the same period a year ago, March’s construction spending was 5.3 percent higher than March 2020’s pace of $1.436 trillion.
Looking at spending on housing construction, March’s residential construction grew to an annual rate of $725.2 billion, which was 1.7 percent higher than February’s pace of $713.1 billion.
Outlays on the construction of new single-family homes in March expanded to an annual rate of $389.9 billion, which was 2 percent higher than February’s rate of $382.2 billion. Spending on construction of new multi-family housing ticked down to an annual rate of $93.4 billion in March, which was 0.3 percent below February’s rate of $93.7 billion.
Overall, residential construction buoyed the month’s construction spending, with public construction spending down 1.5 percent and non-residential private construction spending decreasing 1.1 percent. While declines in those other categories is not good news, the fact that housing keeps seeing more spending on building new inventory comes as good news, given the housing market’s continued high demand.
The U.S. economy gained 266,000 jobs in April, the Bureau of Labor Statistics reported last week. Job categories that helped drive new employment included leisure and hospitality, local government, and education. Those categories’ gains were offset by declines in temporary help services and in couriers and messengers.
The unemployment rate ticked up to 6.1 percent from 6 percent, with the unemployed population little changed at 9.8 million people.
The population of long-term unemployed people – those who haven’t had jobs for 27 weeks or longer – ticked up slightly to 4.2 million people in April. This represented 43 percent of the total unemployed population.
While April did post job growth, it was well below economists’ optimistic expectations of 975,000 jobs, which were likely inspired by March’s gain of 770,000 jobs. This caused the Federal Reserve to claim a little vindication after receiving some criticism for not raising interest rates.
“I feel very good about our policy approach, which is outcome-based,” Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, told Bloomberg. “Let’s actually allow the labor market to recover; let’s not just forecast that it’s going to recover.”
Initial Jobless Claims
In related news, first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending May 1 fell to 498,000, which was 92,000 claims lower than the preceding week’s total of 590,000, the Employment and Training Administration reported last week.
This was well below economists’ forecasts of 540,000 claims and marked the lowest level for initial claims since March 14, 2020’s 256,000 claims.
“Although unemployment remains elevated, the labor market is rapidly recovering,” PNC Financial Chief Economist Gus Faucher told the Reuters news service.
The four-week moving average – regarded as a more reliable measure of jobless claims – declined to 560,000 claims, which was 61,000 claims down from the previous week’s average of 621,000.
This week, we can expect:
Wednesday – Consumer prices for April from the Bureau of Labor Statistics; the federal budget for April from the Treasury Department.
Thursday – Initial jobless claims for last week from the Employment and Training Administration; producer prices for April from the Bureau of Labor Statistics.
Friday – Retail sales for April and business inventories for March from the Census Bureau; industrial production and capacity utilization for April from the Federal Reserve; consumer sentiment for May from the University of Michigan’s Surveys of Consumers.
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