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’s take a look at this week’s big headlines:
Hiring Rate Slows in August
The Labor Department reported that only 173,000 payroll jobs were created in August, which was well below the consensus estimate for 220,000. The payroll figures for July and June were revised up by 44,000. The unemployment rate declined to 5.1%, while the labor force participation rate remained unchanged at 63.6%. Overall, this week’s payroll data payroll data was mixed and a bit perplexing, so I do not expect that the FOMC will raise key interest rates on September 17th.
Construction Spending At 7-Year High
For the month of July, U.S. construction spending increased a healthy 0.7% to a seasonally adjusted rate of $1.08 trillion. This is the highest level in seven years and surpassed economists’ estimates of a 0.5% increase. Meanwhile, June’s gain was revised up significantly to 0.7%, compared with the original 0.1% gain. The increase in spending was driven by a 1.3% increase in private construction spending and a 1.5% gain in nonresidential projects. An increase in homebuilding activity has helped boost overall U.S. economic growth. As reported last week, the economy expanded at an annual rate of 3.7%. Overall, construction spending has increased 13.7% over the past year.
Factory Goods Orders Modestly Rise in June
The Commerce Department reported that new orders for factory goods increased 0.4% in July, missing economists’ estimates of 0.9% growth. June factory goods orders were revised up to reflect a 2.2% gain. July’s factory orders increase was largely driven by a 5.5% spike in transportation equipment orders. Meanwhile, orders for manufactured non-durable goods slipped 1.3%. Overall, factory order gains were modest in July. The data suggests that energy prices, a strong dollar and a struggling manufacturing industry are weighing on growth.
Jobless Claims Remain Under 300,000 6-Months Straight
For the week ending August 28, initial claims for unemployment reached a two-month high, increasing 12,000 to a seasonally adjusted 282,000. This beat economists’ expectations of 273,000. Meanwhile, the four-week moving average rose to 275,500, an increase of 3,250 from last week’s revised average. Claims have remained under 300,000 for the past six months, the longest streak in 15 years. On this front, things are still looking brighter for the labor market.
Trade Gap Balance Narrows in July
Due to lower prices for crude oil and other imports, the Commerce Department announced on Thursday that the trade deficit declined 7.4% in July.The trade deficit was $41.9 billion in July, after exports rose 0.4% to $188.5 billion and imports declined 1.1% to $230.4 billion. Interestingly, the prices of electronic items (e.g., cell phones, etc.) and pharmaceuticals declined in July, which is evidence that a strong U.S. dollar is fueling deflation in imported goods. Overall, a shrinking trade deficit is great news for continued GDP growth.
That’s all I have for you this week; I’ll be in touch again next week with the latest ratings updates out of Portfolio Grader.
Have a great weekend,