News & Events

Economic Advisor: September 6, 2017
September 6, 2017


Construction spending suffered an unforeseen tumble, while employment saw little change and second quarter GDP enjoyed solid growth.

Construction Spending

Construction spending unexpectedly fell for the second consecutive month in July to hit a nine-month low point, according to data released last week by the Census Bureau. For a housing market keen to see inventory growth in order to control ever-growing home prices, a drop in spending wasn’t welcome news, but the Bureau’s report contained a glimmer of good news when it came to real estate.

The market had expected a 0.6 percent increase in spending for the month, but construction spending actually fell 0.6 percent to an annual rate of $1.211 trillion for the month, the Bureau reported. That said, when compared to last year, July’s spending was 1.8 percent higher than July 2016’s rate of $1.189 trillion.

Spending on private construction dropped 0.4 percent to an annual rate of $945.5 billion. That said, residential construction during July was the bright point of the month, growing 0.8 percent to hit an annual rate of $517.5 billion. That growth was led by construction spending for single-family homes, which grew 0.8 percent to an annual rate of $264.1 billion. Meanwhile, spending on multi-family units fell 0.8 percent to an annual rate of $60.9 billion.


Turning to the job market, employment didn’t see much growth, with the economy adding just 156,000 jobs, keeping the unemployment rate at 4.4 percent, according to last week’s report from the Bureau of Labor Statistics. This was below market expectations of 170,000. The sectors of the economy that helped drive that job growth were manufacturing, construction, professional and technical services, healthcare, and mining.

The number of unemployed Americans totaled 7.1 million, which was little changed from the previous month. Many experts chalked up August’s slowing job performance to a regularly appearing slowdown at that time of the year.

“The August payroll count does tend to be biased downward, typically reflecting seasonal difficulty in measuring the timing of back-to-school, as well as low initial response rates during the summer” Morgan Stanley Economist Robert Rosener told the New York Times.

The number of people without jobs for 27 weeks or longer — a.k.a., the long-term unemployed – was little changed for the month at 1.7 million, and accounted for 24.7 percent of the unemployed population. The number of people involuntarily employed on a part-time basis for reasons such as their hours being cut back or that being the only work they could find totaled 5.3 million, which was little changed from the previous month.

Gross Domestic Product

Real gross domestic product (GDP; the output of the U.S. economy) grew at an annual rate of 3 percent during the second quarter of 2017, according to the latest estimate released last week by the Bureau of Economic Analysis.

The news was welcome in that it beat market expectations of 2.8 percent growth, and because it was a sizable increase in the pace of growth from the first quarter’s 1.2 percent gain. Moreover, it was the biggest quarterly GDP growth gain in more than two years.

So what drove the gains? The bureau chalked up the second quarter gains to a variety of factors: increases in consumer spending, nonresidential fixed investments, exports, and federal government spending.

This week, we can expect:


  • Tuesday — Factory orders for July from the Census Bureau.
  • Wednesday — Trade Balance for July from the Census Bureau.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; second quarter productivity from the Bureau of Labor Statistics.
  • Friday — Wholesale inventories for July from the Census Bureau; consumer credit for July from the Federal Reserve.

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