What I Saw Last Week

Total U.S. Construction Spending rose by 0.4% in May – I had forecast an increase of 0.6% – following a revised 0.9% increase (from 1.8%) in April.


The May report featured a 0.3% increase in total private construction spending with total public construction up by 0.7%. Private construction spending included an 0.8% increase in residential construction while non-residential construction declined 0.3%. New single-family construction rose 0.8% while new multi-family construction grew 1.6%.

On a year-over-year basis, total construction spending was up 4.5% with public construction spending up 4.7% and private construction spending up 4.4%.

The takeaway from the report is that, when combined with the downward revision for April, construction spending will make a smaller contribution to Q-2 GDP than is currently being forecast.

June Non-Farm Payrolls grew by 213,000 – I had forecast a more modest increase of 195,000. May payrolls were revised up to 244,000 from 223,000 and April payrolls were also revised higher to 175,000 from 159,000.


Over the past three months, job gains have averaged an impressive 211,000 per month.

June private sector payrolls increased by 202,000 with May payrolls revised up to 239,000 from 218,000 and April payrolls also revised up to 174,000 from 162,000.

Professional and business services led the way with 50,000 new jobs while manufacturing added 36,000. Health care was up 25,000 and construction gained 13,000. Retail lost 22,000 jobs.

The U.S. Unemployment Rate in June rose to 4.0% from 3.8% in May. I had forecast no change.

Persons unemployed for 27 weeks or more accounted for 23.0% of the unemployed versus 19.4% in May.  The U-6 unemployment rate, which accounts for unemployed and underemployed workers, was 7.8%, versus 7.6% in May.

U rate

The rise in the unemployment rate is not concerning as it was a function of more than 600,000 Americans joining the work force.

The takeaway from the employment and unemployment reports is that the data, in aggregate, was strong enough to excite the masses about the economic expansion continuing, but not so strong as to ignite any mass hysteria about inflation taking off and the Federal Reserve needing to clamp down fast and hard to contain it.

What to Watch for This Week

Consumer Credit rose by $9.2 billion in April – mainly driven by an expansion in non-revolving credit –  and I anticipate the May number will show further expansion of $12.4 billion.

Inflation, as measured by the Consumer Price Index, rose by 0.2 in May and I expect to see both the overall rate and core rate 0.2% higher when the June numbers are released.

Consumer Sentiment in early July should have dropped from the final June number of 98.2 to 97.8 on the back of concern over the potential for a trade war.