Construction Spending Disappoints


Construction spending dropped 0.8% in August after being revised down for the month of July. Losses were distributed between both the private and public sectors. Even private residential construction took a hit, with losses in remodeling offsetting gains in single and multifamily construction. Multifamily construction remains the primary driver in the housing market with increases of nearly 36% over one year ago, or four times the growth we are seeing in the single-family market. Read More »

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Payroll Forecast: Upside Risk to September Employment Numbers


We are looking for nonfarm payrolls to increase by 235,000 for September after adding only 142,000 in August. We estimate private sector employment will expand by 225,000. Risks to our forecast are largely to the upside, given that unemployment claims have been trending lower and employment indicators for the manufacturing and service sectors are on the rise, according to surveys by the Institute for Supply Managers (ISM). Revisions could raise the average monthly jobs totals for August and September to 200,000 Read More »

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Five Themes for the Week


I’ve written on five key themes or developments of the week just past in the international economy:

1. According to several press reports, Chinese leaders are considering the replacement of the central bank chief, Zhou Xiaochuan. Mr. Zhou is broadly seen as a reformer, who has been insisting on more liberalization in Chinese financial markets. His sacking would add uncertainty to the course of future policies Read More »

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Durable Goods Better than Headline Suggests


Durable goods orders dropped at an 18.2% pace in August, reversing part but not all of the outsize gains we saw in July. A sharp reversal of the surge in aircraft orders that Boeing saw in the month of July was the reason for the decline. Motor vehicle orders were also down in August Read More »

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New Home Sales Jump


New home sales jumped at a double-digit pace to a 504,000 unit rate in August after being revised up for the month of July. This is welcome news in a housing market that has been lackluster at best and underscores how picky buyers remain in this market. Realtors complain that anything that is not move-in-perfect is not selling, Read More »

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Manufacturing Stays Strong for September


The Purchasing Managers’ Index (PMI) flash reading held steady at 57.9 in September, marking the end of the strongest quarter since the survey began in 2007. Employment was particularly strong in this month’s report, which will help to provide an offset to the weakness we saw in August. An improvement in both domestic economic conditions and exports were driving gains in expectations. Read More »

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Investor Interest in Housing Wanes


Existing homes sales slid to a 5.05 million unit pace in August and were revised down slightly to a 5.14 million unit rate in the month of July. Losses were concentrated in the West and South, where investors had been playing an outsized role in supporting sales. All cash buyers slipped to 23% of the market, the lowest share since December 2009. Read More »

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Housing Starts Dip


Housing starts fell below the one million unit threshold again in August, but were revised up slightly for the month of July. Losses were heavily concentrated in the multifamily market, which has been on a tear. The largest losses in multifamily home construction were experienced in the West, where housing shortages are the most acute. The drop in single-family home construction, which triggers more employment and spending increases, was much less pronounced Read More »

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Fed on Path to Slow Exit from QE


The Federal Open Market Committee (FOMC) voted to further reduce its asset purchases by $5 billion each, which brings its current purchases of mortgage-backed securities down to $5 billion per month and its purchases of Treasury bonds down to $10 billion per month. Chair Yellen also went out of her way to reemphasize that the FOMC plans to end its current round of asset purchases at its next meeting on October 29. (That date also happens to be the 85th anniversary of the 1929 stock market crash, but I am not superstitious.) Read More »

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Inflation Dips on Lower Gas Prices


The Consumer Price Index (CPI) edged 0.2% lower in August, largely on a drop in energy prices. Prices at the pump fell more than 4% alone. All of the savings at the pump is likely to be spent on food, where prices continued to rise during the month. Read More »

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