News & Events

Economic Advisor: May 9, 2018
May 9, 2018


The economy’s employment situation continued to improve, with the unemployment rate falling below four percent. Meanwhile, layoffs ticked up and construction spending declined.


The big economic headline last week was the Bureau of Labor Statistics’ announcement that the unemployment rate had fallen to 3.9 percent. This was the first time unemployment fell below four percent since 2000, during the dot-com boom.

All told, the economy added 164,000 more jobs in April. Key job growth sectors included professional and business services, manufacturing, healthcare and mining. That number could indicate that the pace of jobs being added is slowing down, as economists had expected the economy to add at least 184,000 jobs.

“The moderation in job gains over the past two months may mark the beginning of the slow deceleration to a sustainable pace of job gains, which we estimate to be around or a little below 100,000 per month,” JPMorgan Economist Michael Feroli told the New York Times.

Looking at wages, average hourly earnings for all employees rose by four cents to $26.84. Over the year, average hourly earnings have grown by 67 cents, which is 2.6 percent higher than a year ago. Will the tightening job market finally spur some increased wages?

“We are getting closer and closer to that flashpoint, but we don’t know exactly when it is going to happen,” Ellen Zentner, chief U.S. economist for Morgan Stanley, told the Times.

Initial Jobless Claims

In related news, first-time claims for unemployment benefits filed by the newly unemployed during the week ending April 28 grew to 211,000, an increase of 2,000 claims from the preceding week’s total of 209,000, the Employment and Training Administration reported last week. The Administration added that the impacts of hurricanes Harvey, Irma, and Maria continued to skew layoffs data.

The four-week moving average — regarded as a more reliable measure of initial jobless claims — fell to 221,500, a drop of 7,750 claims from the prior week’s average of 229,250. This was the lowest level for the four-week average since March 3, 1973’s average of 221,250. Last week’s report also marked the 165th week in which initial claims were below the 300,000-claim level, which economists consider an indicator of a growing job market.

Construction Spending

Construction spending dipped to an annual rate of $1.284 trillion in March, which was 1.7 percent below February’s pace of $1.306 trillion, according to last week’s report from the Census Bureau. While spending was down for the month, when compared to the same period a year ago, March’s spending was 3.6 percent higher than March 2017’s rate of $1.239 trillion.

Residential construction declined in a similar fashion, falling to an annual rate of $536.8 billion in March, which was 3.5 percent below February’s rate of $556.5 billion. However, it is important to note that residential construction’s drop was fueled mainly by a 2.7 percent fall in multi-family homes. Construction on single-family homes only ticked down 0.4 percent.

For a real estate market starved for additional inventory, the decline in residential spending wasn’t welcome news.

This week, we can expect:

  • Monday — Consumer credit for March from the Federal Reserve.
  • Wednesday — Producer prices for April from the Bureau of Economic Analysis; wholesale inventories for March from the Census Bureau.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; consumer prices for April from the Bureau of Economic Analysis; federal budget for April from the Treasury.
  • Friday — Import prices for April from the Bureau of Labor Statistics; consumer sentiment for May from the University of Michigan Surveys of Consumers.

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