Last Week’s Economic News in Review (November 10th, 2021)

November 10th, 2021

Construction spending unexpectedly fell, with residential construction spending posting losses across the board. Meanwhile, the economy enjoyed healthy job growth and continued to see declining layoffs.

Construction Spending

Construction spending fell to an annual rate of $1.573 trillion in September, which was 0.5 percent below August’s revised rate of $1.582 trillion, according to last week’s report from the Census Bureau. This was well off from the 0.4 percent increase that economists had forecasted for September.

Spending on private construction in September declined to an annual rate of $1.229 trillion, which was 0.5 percent below August’s pace of $1.236 trillion. Spending on housing construction in September also fell, dropping to an annual rate of $773.5 billion, which was 0.4 percent lower than August’s revised rate of $776.8 billion.

Looking more closely at residential construction spending, outlays on the construction of new, single-family homes in September dipped to an annual rate of $412.6 billion, which was 0.6 percent below August’s revised rate of $415.3 billion. Spending on the construction of new multi-family housing ticked down to an annual rate of $100.04 billion in September, which was 0.3 percent below August’s revised rate of $100.3 billion.

When compared to the same period a year ago, September’s construction spending was 7.8 percent higher than September 2020’s pace of $1.459 trillion, and September’s residential construction was 19.3 percent above the September 2020 pace of $648.2 billion. But it’s still not enough to keep pace with current market needs, according to Jim Parrott, owner of housing finance strategy firm Parrott Ryan Advisors.

“Given the population, there are fewer homes available to rent or to own than we’ve had really at any time since World War Two,” Parrott told NPR.

Employment Situation

The U.S. economy added 531,000 jobs in October, the Bureau of Labor Statistics reported last week. Job categories that contributed to last month’s employment gains included leisure and hospitality, professional and business services, manufacturing, and transportation and warehousing. The jobs report outpaced the 450,000 jobs economists had expected for the month.

The new jobs helped push October’s unemployment down to 4.6 percent from 4.8 percent in September, and the unemployed population fell to 7.4 million people in October from 7.6 million in September.

The population of long-term unemployed Americans – those who haven’t had jobs for 27 weeks or longer – declined by 357,000 people in September to 2.3 million people. This represented 31.6 percent of the total unemployed population.

It’s important to note that there’s a second piece of good news to the October jobs report that didn’t make many headlines last week: August and September were significantly underreported and the revised numbers turned once sour reports to more optimistic news. When originally reported, the BLS posted 235,000 jobs gained in August and 194,000 jobs added in September. Those figures have since been revised to 483,000 and 312,000, respectively, which is a solid 366,000 jobs higher than originally reported.

“Americans have good reason to be anxious about the economy as the Delta wave hurt growth and ignited higher inflation, but today’s report shows that as Delta winds down, the recovery is getting back into gear,” Moody’s Analytics Chief Economist Mark Zandi told Politico.

Initial Jobless Claims

And the good employment news kept coming last week. First-time claims for unemployment benefits filed by recently unemployed Americans during the week ending October 30th declined to 269,000, which was 14,000 claims down from the preceding week’s revised total of 283,000, the Employment and Training Administration reported last week.

The decline not only put initial claims for the week below economists expectations for an increase to 275,000 claims but also marked the lowest level for initial claims since March 14, 2020’s 256,000 claims.

The four-week moving average – regarded as a more stable barometer of jobless claims – fell to 284,750 claims, which was 15,000 claims below the previous week’s revised average of 299,750. This, too, marked the lowest level for this average since March 14, 2020, when it was 225,500

It’s also important to note that economists consider any level of first-time claims below 300,000 to indicate a growing job market, so that’s good news for both the weekly figure and the four-week average.

This week, we can expect:

Tuesday – Producer prices for October from the Bureau of Labor Statistics.

Wednesday – Initial jobless claims for last week from the Employment and Training Administration; consumer prices for October from the Bureau of Labor Statistics; wholesale inventories for September from the Census Bureau.

Friday – Consumer sentiment for November from the University of Michigan Surveys of Consumers.

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