Nov. 4/11 2013; Volume 27/number 14
By FCNews staff
UNEMPLOYMENT LOW: Construction employment rose by 20,000 in September, and the industry’s unemployment rate fell to a six-year low of 8.5%, according to Associated General Contractors of America. Also, construction spending increased for the fifth consecutive month in August. “Both reports show the industry was doing relatively well before the government shutdown forced many firms to hit the pause button,” said Ken Simon-son, the association’s chief economist. “The shutdown likely disrupted a variety of projects and may have caused private investors and developers to delay decisions about new projects or plant expansions. As a result, future spending and hiring gains may be weaker.” Construction employment totaled 5,826,000 in September, a gain of 20,000 from August, which was revised up by 8,000 from the Labor Department’s initial estimate. The September figure is 3.4% higher than September 2012, while aggregate weekly hours of all construction employees rose 4.2% over the year, indicating firms are adding to existing workers’ hours in addition to hiring new employees.
MANUFACTURING EXPANDS: Economic activity in the manufacturing sector expanded in October for the fifth consecutive month, and the overall economy grew for the 53rd consecutive month, according to the nation’s supply executives in the latest Manufacturing Institute for Supply Management (ISM) Report On Business. The PMI registered 56.4%, an 0.2 percentage point increase from September’s reading of 56.2%. The PMI has increased progressively each month since June, with October’s reading reflecting the highest PMI in 2013. The New Orders Index increased slightly in October by 0.1 to 60.6%, while the Production Index de-creased 1.8 percentage points to 60.8%. Both the New Orders and Production indexes have registered above 60% for three consecutive months. Of the 18 manufacturing industries, 14 reported growth in October.
APPLICATIONS JUMP: Mortgage applications surged with a 6.4% increase for the week ending Oct. 25, the Mortgage Bankers Association said. The refinance index rose 9%, while the purchase index grew 2% as refinance applications ticked up. The refinance share of mortgage activity increased to 67% of total applications, which is the highest level since June. The average rate for a 30-year, fixed-rate mortgage dropped to 4.33% from 4.39%.
In related news, the S&P CaseShiller home price index rose 0.93% in August. July’s data was revised down to show a 0.6% rise. Over the last year, home prices were up 12.82%, ahead of expectations for a 12.5% increase. That’s the fastest pace since February 2006. July’s data was revised down to show a 12.31% rise in home prices.
SHUTDOWN MALAISE: U.S. consumer confidence fell sharply in October as consumers turned gloomier due mostly to the government shutdown and debt-ceiling crisis, according to the Conference Board, which also said its index dropped to 71.2 in October from a revised 80.2 in September. Economists had expected a reading of 75.0 in October. “The government shutdown and debt-ceiling crisis took a particularly large toll on consumers’ expectations,” said Conference Board economist Lynn Franco. The expectations index also sank to 71.5 in October from a revised 84.7 in September.
SPENDING SURGE: PulteGroup, the second largest U.S. home builder, reported third quarter home sale revenues rose 21% to $1.5 billion, with the average selling price rising 11% to $310,000. However, the company’s orders fell 17% to 3,781 homes in the quarter. Pulte said the slowdown would be short and the company expects to nearly double its spending on land purchases and development this year and will increase the outlay again next year. Third quarter net income rose to $2.28 billion, or $5.87 per share, from $116.6 million, or 30 cents per share, a year earlier. The results include the reversal of a deferred tax asset valuation allowance of $2.1 billion, or $5.42 per share. Home sale revenue rose 21% to $1.49 billion.