Construction spending tumbled, while unemployment dropped to a 49-year low, and layoffs increased

Last Week’s Economic News in Review
May 8, 2019

Construction spending tumbled, while unemployment dropped to a 49-year low, and layoffs increased.

Construction Spending

Construction spending for March fell to an annual rate of $1.282 trillion, a 0.9 percent decline from February’s pace of $1.2933 trillion, the Census Bureau and Department of Housing and Urban Development jointly reported last week. Compared to the same period last year, March’s spending was down 0.8 percent from March 2018’s rate of $1.2931 trillion.

This was the first monthly decline in four months, and the lowest rate in more than two years. Economists had expected a less jarring 0.4 percent decline for March.

Spending on private construction dropped to an annual rate of $961.5 billion, which was 0.7 percent down from February’s rate of $968.6 billion for private construction. Spending on residential construction dropped to an annual rate of $500.9 billion in March, which was 1.8 percent below February’s pace of $510.1 billion.

“Builders report the market is stabilizing following the slowdown at the end of 2018 and they anticipate a solid spring home-buying season,” Greg Ugalde, chairman of the National Association of Homebuilders, remarked on the construction market in a public statement.

Employment Situation

The U.S. economy added 263,000 jobs in April, with key job-growth sectors being professional and business services, construction, healthcare, and social assistance, according to last week’s report from the Bureau of Labor Statistics.

That job growth pushed the unemployment down 0.2 percent to 3.6 percent, with the number of unemployed Americans falling by 387,000 to 5.8 million. This marked the lowest unemployment rate since December 1969.

Average hourly earnings rose by six cents to $27.77 for all non-farm jobs. Over the past 12 months, average hourly earnings have grown by 3.2 percent. Average hourly earnings for production and nonsupervisory employees grew by seven cents to hit $23.31 in April. The mix of job gains and moderate earnings increases mean good news for anyone watching interest rates.

“Employment gains are strong enough to dispel any immediate concerns over the health of the economy, while wage gains are not strong enough to force the Federal Reserve’s hand to tighten the policy stance,” Harm Bandholz, chief U.S. economist for UniCredit Research, told the New York Times.

Initial Jobless Claims

In other employment news, first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending April 27 hovered at 230,000, the same level as the preceding week’s total of 230,000, the Employment and Training Administration reported last week.

The four-week moving average, which is considered a more stable measure of jobless claims, rose to 212,500, an increase of 6,500 claims from the preceding week’s average of 206,000 claims.

The Administration’s latest report marked the 217th straight week that initial claims have come in below the 300,000-claim level, which economists consider an indicator of a growing job market.

This week, we can expect:
• Tuesday – Consumer credit for March from the Federal Reserve.
• Thursday – Initial jobless claims for last week from the Employment and Training Administration; the trade deficit and wholesale inventories for March from the Census Bureau; producer prices for April from the Bureau of Labor Statistics.
• Friday – The federal budget for April from the Treasury Department; consumer prices for April from the Bureau of Labor Statistics.

Madeline Gliege 
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