***Eye on the Economy is a biweekly survey of NAHB’s economic and housing analysis from Chief Economist David Crowe.
A disappointing jobs report sounded a note a caution concerning recent labor market momentum. The Bureau of Labor Statistics reported that payroll employment expanded by only 142,000 in September, with revisions to the previous two months subtracting an additional 59,000 jobs. Residential construction employment growth slowed as well, adding only 3,900 jobs for the month.
The national unemployment rate was unchanged at 5.1%, but the household survey showed a decline in the labor force of 350,000 and a decline in the labor force participation rate to 62.4%. The September report comes as the count of unfilled jobs is rising for most sectors of the economy, an issue that the construction industry has increasingly faced over the last two years.
The weak labor market report is certain to give Federal Reserve policymakers pause concerning the expected first hike of short-term interest rates. The September meeting of the Federal Open Market Committee, the monetary policy-setting arm, concluded with no increase in rates, citing global economic and financial developments and their likely impact on US economic growth. If sustained, September’s jobs trends will strengthen the doves’ case for waiting longer for an eventual rate increase.
August census construction spending data showed total private residential construction spending continues to increase, rising to a seasonally adjusted annual rate of $390 billion. Annually, multifamily spending rose 25% from the revised August 2014 estimate, and spending on single-family construction was 14% higher. On a month-over-month basis, private single-family spending was $219 billion, up by 0.7% over the revised July estimate. Private multifamily spending increased to $53 billion, up by 4.8%, reversing the decline in July.