New home construction bucked a downturn in overall construction, while the monthly unemployment rate was essentially unchanged and layoffs saw a small spike.
Construction spending in September dipped to an annual rate of $1.15 trillion, which was 0.4 percent below August’s pace of $1.154 trillion, according to the Census Bureau. Compared annually, September’s rate was 0.2 percent below September 2015’s estimate of $1,152.1 billion, marking the first year-over-year drop in five years.
Spending on private construction dipped to an annual rate of $879.7 billion, which was 0.2 percent below the revised August estimate of $881.6 billion. But, residential construction rose to an annual rate of $453.7 billion in September, which was 0.5 percent over the August pace of $451.3 billion. Nonresidential private construction was dropped 1 percent to an annual rate of $426 billion.
So what was the key driver for the overall downward trend? Public construction spending fell 0.9 percent to an annual rate of $270.3 billion.
“There is still plenty of oomph in private demand for construction and growing support for school construction, but public infrastructure investment is crumbling just when it is needed most,” Associated General Contractors of America Chief Economist Ken Simonson told National Mortgage Professional Magazine. “These conflicting trends have left total construction spending nearly flat for the past 15 months.”
The U.S. economy added 161,000 non-farm jobs in October, which kept the unemployment rate at 4.9 percent, with 7.8 Million people out of work, the Bureau of Labor Statistics reported last week. Key sectors that added jobs were healthcare, professional and business services, and financial activities.
The number of Americans involuntarily employed on a part-time basis for economic reasons, such as their hours getting cut or that being the only work they could find, essentially hovered at 5.9 million. The number of people without a job for 27 weeks or longer, referred to as the long-term unemployed, was unchanged at 2 million in October, which represented 25.2 percent of the unemployed population.
Average hourly earnings for all employees on non-farm payrolls grew by 10 cents in October to $25.92, following an 8 cent increase in September. Compared to October 2015, average hourly earnings rose by 2.8 percent.
“We’re increasingly seeing evidence that the labor market is tight enough to put some upward pressure on wages and inflation generally as well,” High Frequency Economics’ Chief U.S. Economist Jim O’Sullivan told the Washington Post. “The message generally from this is that the Fed probably won’t want the unemployment rate to go a lot lower.”
Initial Jobless Claims
First-time claims for unemployment benefits filed during the week ending October 29 hit their highest point in three months, according to last week’s report from the Employment and Training Administration. Initial jobless claims filed during that week hit 265,000, a gain of 7,000 claims from the preceding week’s total of 258,000.
Most economists chalked up the surge partially to Hurricane Matthew, which allowed some employees eligible to claim unemployment benefits after the storm temporarily closed some businesses starting October 8. State-level data did indicate upswings in those states. Others said the rise was a bit of a statistical “reset.”
“The snapback in the number of new filers may be a garden variety makeup for two readings below 250,000, rather than a result driven specifically by the storm,” Amherst Pierpont Securities Economist Stephen Stanley told the Wall Street Journal.
The four-week moving average — considered a more stable measure of layoffs — notched up to 257,750, an upturn of 4,750 claims from the prior week’s average of 253,000. The week was the 87th consecutive week of first-time claims under 300,000, which is a level economists consider indicative of a growing job market. This is the longest such streak since 1970.
This week we can expect:
- Monday — Consumer credit for September from the Federal Reserve.
- Thursday — Wholesale inventories for September from the Census Bureau.
- Friday — Initial jobless claims for last week from the Employment and Training Administration; October budget from the Treasury Department.