Construction spending saw an unexpected drop, while the economy enjoyed a solid jobs report, and layoffs tumbled as well.
Economic Update: Construction Spending
After posting five straight months of gains, construction spending saw an unexpected drop. Construction spending fell to an annual rate of $1.21 trillion in March, down 0.2 percent from February’s pace of $1.22 trillion, the Census Bureau reported last week. This was well below market expectations of a 0.4 percent gain for the month.
Compared to last year, March’s construction spending was 3.6 percent higher than March 2016’s rate of $1.17 trillion.
The factors driving construction spending downward for March were drop offs in public sector construction and commercial construction. Meanwhile, the housing component of construction spending fared better. On the whole, private sector construction hovered at a $940.1 billion annual rate, which was nearly unchanged from February’s $940.2 billion paces. However, residential construction spending hit a $503.4 billion annual rate in March, which was a solid 1.2 percent over February’s $497.4 billion pace.
Economic Update: Employment
The economy added 211,000 jobs in April, pushing the unemployment rate down to 4.4 percent from March’s 4.5 percent, with a total of 7.1 million Americans unemployed, the Bureau of Labor Statistics reported last week. Sectors that enjoyed strong job growth included leisure and hospitality; healthcare and social assistance; financial services; and mining.
The number of Americans unemployed on a long-term basis — 27 weeks or longer — hovered at 1.6 million in April, and accounted for 22.6 percent of the total unemployed population. The number of people involuntarily employed on a part-time basis for economic reasons — such as that being the only work they could find or their hours being cut — fell by 281,000 to 5.3 million for the month.
The labor force participation rate — the percentage of employable Americans either with a job or actively looking for one — was 62.9 percent, which was little changed from April.
Economic Update: Initial Jobless Claims
First-time claims for unemployment benefits filed by the newly laid off during the week ending April 29 fell to 238,000, a drop of 19,000 from the preceding week’s 257,000 claims, the Employment and Training Administration reported. This was well below the 245,000 claims that job market watchers had anticipated.
The four-week moving average — considered a more stable measure of layoffs — ticked up slightly to 243,000, a gain of 750 claims from the prior week’s average of 242,250. This marked the 113th consecutive week that jobless totals have been below 300,000, a level that economists consider indicative of a growing job market.