Economic Advisor -March 11,2020

 

Last Week's Economic News in Review
March 11, 2020
Construction spending rose to record levels, while employment expanded, and layoffs declined.

Construction Spending

Construction spending rose to an annual rate of $1.369 trillion in January, which was 1.8 percent higher than December's pace of $1.345 trillion. January's increase marked a record high for monthly construction spending. Compared to the same period a year ago, January's rate was 6.8 percent higher than January 2019's rate of $1.282 trillion.

Looking at housing, spending on residential construction hit an annual rate of $554.8 billion in January, which was 2.1 percent higher than December's rate of $543.6 billion. Spending on single-family home construction rose to an annual rate of $297.7 billion, which was 2.8 percent higher than December's pace of $289.6 billion.

"With the Federal Reserve on pause and attractive mortgage rates, the steady rise in single-family construction that began last spring will continue into 2020," noted Robert Dietz, chief economist for the National Association of Home Builders, in a public statement. "However, builders continue to grapple with a shortage of lots and labor while buyers are frustrated by a lack of inventory, particularly among starter homes."

Employment

Meanwhile, the economy added 273,000 jobs in February, with key job growth sectors being healthcare, social assistance, food and drinking services, government, construction, professional and technical services, and financial services, according to last weeks' report from the Bureau of Labor Statistics.

This kept the unemployment rate hovering at 3.5 percent, with the unemployed population at 5.8 million people. The number of long-term unemployed Americans - those without a job for 27 weeks or longer - remained virtually unchanged at 1.1 million, representing 19.2 percent of the unemployed population.

February's average hourly earnings for all employees grew by 9 cents to $28.52. Compared to the same period a year ago, average hourly earnings were up 3 percent.

The big question among many jobs sector watchers was whether or not the coronavirus would impact the job market,

"It's certainly a relief that we had a strong tailwind," Diane Swonk, chief economist at tax advisory firm Grant Thornton, told the New York Times. "Service, leisure and hospitality, these are all very vulnerable. The good news is that these workers had some cushion ahead of time. It helps blunt the blow."

Jobless Claims

Looking at layoffs, first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending Feb. 29 dipped to 216,000, a decline of 3,000 claims from the previous week's total of 209,750, the Employment and Training Administration reported last week.

The four-week moving average, which is considered a more stable measure of jobless claims, grew to 213,000, which was 3,250 claims higher than the preceding week's average of 209,750 claims.

The Administration's latest report marked the 261st 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:
  • Wednesday - Consumer prices for February from the Bureau of Labor Statistics; the Federal budget for February from the Treasury Department.
  • Thursday - Initial jobless claims for last week from the Employment and Training Administration; producer prices for February from the Bureau of Labor Statistics.
  • Friday - Consumer sentiment for March from the University of Michigan Surveys of Consumers; import prices for February from the Bureau of Labor Statistics.