It’s Friday and that means it’s time to review the latest economic data and identify which pockets of the economy are heating up and which are slowing down. Don’t worry about catching every headline and every report throughout the week—I recap all of the most important news impacting your wealth right here every Friday. Let’ss take a look at this week’ss big headlines:
Jobs Growth Falls Short of Expectations
The Labor Department reported that 142,000 new jobs were created in August, well below economists’ consensus estimate for 225,000. July payrolls were revised to 212,000, up from 209,000, and June payrolls were revised to 267,000, down from 298,000. The unemployment rate declined to 6.1% in August, down from 6.2% in July. This year, the payroll report has averaged 215,000 new jobs each month, so the August report was clearly disappointing. But August is notoriously famous for seasonal distortions, and we’ll likely see these number revised in the upcoming months.
Construction Spending Hits New High
In July, construction spending increased 1.8% and June was revised to a 0.9% decline (up from the previous 1.8% decline). Total construction is now a seasonally adjusted annual rate of $981.3 billion, the highest level since December 2008. Spending on single-family homes rose 0.5%, while apartment construction climbed 0.2%. Government project spending increased 3%. The rise in construction spending in July marks the biggest one-month gain since May 2012. If the construction sector can stabilize and continue to report steady growth, overall GDP will likely improve.
Factory Orders Spurs Manufacturing Growth
Factory goods orders surged in July, rising 10.5%. June’s orders were revised higher to 1.5%, up from 1.1%. Orders for automobiles climbed 7.3%, the biggest gain since March 2011, while capital goods orders soared 52.5%. Orders for non-defense capital goods (excludes aircraft) slipped by 0.7%. This was a solid report and offers further proof that the manufacturing sector is now growing at an incredibly strong pace.
U.S. Jobless Claims Hits Just Above Estimates
For the week ended August 30, jobless claims jumped to 302,000, marking a 4,000 increase. This was just above the consensus estimate for 300,000. The four-week moving average rose by 3,000 to 302,750. Jobless claims have been above the 300,000 level three of the past seven weeks. This continues to be great news for the U.S. job market, as we’re seeing fewer layoffs.
Smaller Trade Gap Bodes Well For Economy
In July, the U.S. trade gap narrowed by 0.6% to $40.5 billion. Exports increased 0.9%, while imports rose 0.7%. Economists were expected a trade deficit of $42.5 billion. As you know, a small trade deficit bodes well for further U.S. economic growth, as it means there is more demand for U.S. goods and services both domestic and abroad. Also worth noting, the petroleum deficit is now at its lowest level since July 2009.
That’s all I have for you this week. I’ll be in touch with the latest Portfolio Grader changes and Stock of the Day on Monday.
Have a great weekend,