News & Events

Economic Advisor: October 11, 2017
October 11, 2017


 

Construction spending rebounded while employment sagged and layoffs decreased.

Construction Spending

The housing market is desperate for the tempered pricing that increased inventory can bring. Construction spending in August reversed July’s downward trend, resulting in growth to an annual rate of $1.218 trillion. This marked a 0.5 percent gain over July’s pace of $1.212 trillion, the Census Bureau reported last week.

Private construction spending hit an annual rate of $954.8 billion, which was 0.4 percent higher than July’s rate of $950.5 billion, and residential construction spending in specific hit an annual rate of $520.9 billion during August, which represented a 0.4 percent gain over July’s pace of $518.6 billion. Digging deeper into the residential data, spending on single-family home construction grew to an annual rate of $263.7 billion, which marked a 0.3 percent increase over July’s $262.9 billion.

It’s likely that this rebound will continue as Texas, Louisiana and Florida begin massive, post-hurricane reconstruction projects.

“Much of the gain is presumably linked to the aftereffects of the hurricanes. Nonetheless, manufacturing growth is strong,” RDQ Economics Chief Economist John Ryding told the Reuters news service.

Employment Situation

After years of monthly increases, the economy lost 33,000 jobs during September, the Bureau of Labor Statistics reported last week. The Bureau noted that the recent hurricanes led to the drop.

That said, the unemployment rate notched down 0.2 percent to 4.2 percent in September, with the unemployed population dropping 331,000 to 6.8 million. The labor force participation rate – the percentage of employable Americans either with jobs or actively looking for work – held steady at 63.1 percent.

The population of long-term unemployed – those without work for 27 weeks or longer – hovered at 1.7 million and accounted for 25.5 percent of the total unemployed population.

Average hourly earnings for all employees rose by 12 cents to $26.55 in September. Over the past 12 months, average hourly earnings have increased by 74 cents, or 2.9 percent.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending September 30 fell to 260,000, a drop of 12,000 claims from the preceding week’s total of 272,000, the Administration reported last week. The Administration noted that the impacts of hurricanes Harvey and Irma continued to skew lay-off data.

The four-week moving average — regarded as a more reliable measure of initial jobless claims — was also thrown off, declining to 268,750 claims, a fall of 9,500 claims from the prior week’s average of 277,750. Despite the storm, this marked the 135th week in which initial claims were below the 300,000-claim level, which economists consider an indicator of a growing job market.

This week, we can expect:

  • Thursday – Initial jobless claims for last week from the Employment and Training Administration; producer price index for September from the Bureau of Labor Statistics.
  • Friday – Consumer price index for September from the Bureau of Labor Statistics; retail sales for September and business inventories for August from the Census Bureau; consumer sentiment for October from the University of Michigan Surveys of Consumers.

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