Construction spending rose a solid 0.6% in September, led by the residential construction monthly gain of 1.9%, with a year-on-year gain of 17.1%. New multi-family units are once again at the top of the residential component, up 4.9% in September for a 26.7% year-on-year gain. Single-family home construction rose 1.3% for a respectable year-on-year gain of 12.7%. Non-residential spending didn’t fare so well in September, down 0.7% with declines in most of its sub-components. However, the year-on-year rate is still in the positive at plus 14.9%.
October brought a $4 rise in consumers’ spending habits, as Americans reported spending an average of $92 per day in the month. This $92 average is similar to the October 2008 average of $91 per day, and the 2013-2014 averages of $88 per day, but is considerably higher than the 2009-2012 October averages, which ranged from $63-$72 per day. The past couple of years have yielded increased spending throughout the October and November months, and, depending on November’s spending figure, this year may be poised to follow suit.
There was a rise in the number of jobs created in October according to Gallup’s Job Creation Index, which averaged a level of 32 points for the 6th month straight. Within the month of October, 43% of workers reported that their employer was hiring workers and expanding its workforce, and 11% reported that their employer was letting people go and reducing its workforce. 40% of workers surveyed described their workforce as “not changing” in size. It is a positive sign that job creation is holding at a high level, but some tend to wonder if it has the capacity to climb any higher.
On the flip side is the Job-Cut report for October, released by Challenger, which revealed that layoff announcements fell to 50,504 in the month from September’s 58,877. The number of announcements in October also came in significantly lower than the 3rd-quarter monthly average of 68,586. The announcements mostly came out of the retail and energy sectors, the latter being hurt by continued low oil prices. According the Challenger, an estimated 25% of the layoff announcements in October were tied to oil prices.
The percentage of adults participating in the workforce, also measured by Gallup, came in at 67.7% in for October, up very slightly from September’s 67.5%, and from the 66.6% participation measured in October 2014. Gallup’s measure of US unemployment yielded a rate of 5.6% for October, down from 6.3% in September, for the lowest rate since tracking began in 2010. Also inching downward was the underemployment rate for the month, down 0.3% from September to 13.8%, which is also a record low. While unemployment fell in October, the rate of “involuntary part-time” (adults who are working part time but desire full-time work) rose 0.4 points in the month to 8.2%.
Payroll and services reports for October suggest that an upcoming rate hike is even more probably. Non-farm payrolls rose 271,000 in the month, for the strongest gain since December of last year. Among the payroll improvements was a 78,000 rise in professional & business services, a 51,000 rise in trade & transportation, a 44,000 rise in retail trade, and a 31,000 rise in construction, a reflection of strong numbers in construction spending. The unemployment rate decreased by 1-tenth to 5.0% for its lowest rate since April 2008, and brings another positive to the US economy.
Mortgage Rates rose across the board in the past week, with an increase of approximately 1/8 percentage-points for most loan program options. The exception is the 30-year Jumbo, which still increased, but only by a small margin of 0.6 basis points. The largest increase was seen in both the FHA 203k and USDA programs, rising 12.9 basis points in the week. Following closely behind was the 30-year fixed conventional rate, up 12.6 basis points to 3.875% (3.915% APR). This is still about 1/4 percentage points lower than the year-ago rate of 4.125% (4.140% APR), and keeps the 30-year fixed rate blow the 4.00% threshold. [Visit our Mortgage Rates page for more in-depth weekly rate updates.]
Chief economist Sean Becketti responded to the rise in mortgage rates on behalf of Freddie Mac, stating,
“Treasury yields climbed nearly 20 basis points over the past week, capturing the market movement following last week’s FOMC meeting. In response, the 30-year mortgage rate experienced its largest increase since June… Recent commentary suggests interest rates may rise in the near future. Janet Yellen referred to a December rate hike as a ‘live possibility’ if incoming information supports it. The October jobs report to be released this Friday will be one crucial factor influencing the FOMC’s decision.”
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