Economy Watch: Economy Creates Mediocre 162K Jobs; Manufacturing Still Growing; Construction Spending Drops
- Aug 02, 2013
On Friday, the U.S. Bureau of Labor Statistics reported that the economy created 162,000 jobs. That’s a little more slowly than the prior 12-month average of a gain of 189,000 jobs, but there were nevertheless gains in retail trade, food services and drinking places, financial activities, and wholesale trade.
The official unemployment rate edged down to 7.4 percent. That’s the lowest the rate has been since December 2008, when it was on its way skyward, to a recent high of 10.1 percent. As recently as March 2007, the rate was 4.4 percent.
On Thursday, the U.S. Department of Labor reported that for the week ending July 27, initial unemployment claims were 326,000, a decrease of 19,000 from the previous week, and the smallest number since January 2008. The less jumpy four-week moving average was 341,250, a decrease of 4,500 from the previous week.
Manufacturing Sector Still Growing
Manufacturing activity expanded again in July, and the overall economy grew for the 50th consecutive month, according to the latest Manufacturing ISM Report On Business, which was released on Thursday. The Purchasing Managers Index (PMI) registered 55.4 percent, an increase of 4.5 percentage points from June’s reading of 50.9 percent.
The New Orders Index increased in July by 6.4 percentage points to 58.3 percent, while the Production Index increased by 11.6 percentage points to 65 percent. The Employment Index registered 54.4 percent, an increase of 5.7 percentage points compared to June’s reading of 48.7 percent. The Prices Index came in at 49 percent, decreasing 3.5 percentage points from June, meaning that overall raw materials prices decreased from last month.
Most kinds of industry expanded in July, according to the ISM, with furniture and related products, textiles, printing, and paper products doing the best. A few manufacturing categories contracted in July, namely plastics and rubber products; apparel, leather and allied products; and machinery.
Construction Spending Down in June
The Census Bureau reported on Thursday that construction spending during June 2013 was at an annualized rate of $883.9 billion, or 0.6 percent below the revised May figure. Still, the June figure is 3.3 percent higher than during June 2012.
Spending on private construction was at an annual rate of $622.8 billion, or 0.4 percent below the revised May rate. That seems to a downtick. Public construction, on the other hand, is more consistently down because of the sequester. In June, the annualized rate of public construction spending was $261.1 billion, or 1.1 percent below the revised May rate of $264 billion. Compared with last year, public spending on construction is down 9.3 percent.
Wall Street decided ahead of time that the jobs numbers were going to be good (instead of mediocre), and the equities markets reached more record highs on Thursday. The Dow Jones Industrial Average was up 128.48 points, or 0.8 percent, while the S&P 500 gained 1.3 percent and the Nasdaq was up 0.4 percent.