News & Events

Economic Advisor: June 7, 2017
June 7, 2017


 

Construction spending turned in mixed results, while unemployment ticked down and layoffs notched up.

Construction Spending

Construction spending was a mixed bag in April, with overall spending performing well below anticipated levels for the month. April’s construction spending dropped 1.4 percent to an annual rate of $1.218 trillion, the Census Bureau reported last week, which was well off from the market expectation of a 1.1 percent gain. That said, compared to last year, April’s construction spending was 6.7 percent higher than April 2016’s pace of $1.142 trillion.

Spending on private construction dipped 0.7 percent in April to an annual rate of $943.3 billion, and spending on residential construction followed suit, dropping 0.7 percent to an annual rate of $516.7 billion.

However, while overall residential construction spending fell, it is important to note that spending on construction of single family homes actually grew 0.8 percent in April to hit an annual rate of $262.1 billion. This was good news for housing market watchers, given that inventory has been the main price control, and a key to healthy volume.

Employment Situation

The economy added 138,000 jobs in May, pushing the unemployment rate down to 4.3 percent from April’s 4.4 percent, with 6.9 million Americans out of work, according to the Bureau of Labor Statistics. The key growth sectors for jobs last month were healthcare and mining.

The labor force participation rate — the percentage of the employable population that either had work or was actively looking for work — dropped 0.2 percent to hit 62.7 percent in May.

The number of unemployed people who have been without a job for 27 weeks or longer in May — known as the long-term unemployed — hovered at 1.7 million and accounted for 24 percent of the unemployed population. The number of Americans involuntarily employed on a part-time basis for reasons such as their hours being cut or because they were unable to find full-time work, came in at 5.2 million in May, which was also essentially unchanged from April.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending May 27 hit 248,000, an increase of 13,000 claims from the preceding week’s total of 235,000, the Employment and Training Administration Reported last week.

The four-week moving average — considered a more stable measure of initial jobless claims — notched up to 238,000, an increase of 2,500 from the prior week’s average of 235,500. This marked the 117th week that initial claims have fallen below the 300,000-claim level, which economists consider an indicator of a growing job market.

This week, we can expect:

  • Monday — Factory orders for April from the Census Bureau.
  • Wednesday — Consumer credit for April from the Federal Reserve.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration.
  • Friday — Wholesale inventories for April from the Census Bureau.

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