Daily Economic Update: Jobless Claims, ISM Index

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights jobless claims, the ISM manufacturing index, and construction spending.

• New jobless claims did not show much improvement compared to the end of July, and currently stand at 410,250 for the four-week average. Last week’s claims fell by 12,000 to 409,000, but the fall was partly offset by a 4,000 adjustment for the week before. No special extenuating factors were reported in the latest report. The 400,000 level is generally considered by economists as a point at which the economy is creating more jobs than losing.
• Continuing claims continued falling, by 18,000, to 3.735 million with the four-week average. Tomorrow’s employment report will provide a clearer picture on job creations. Assuming new jobless claims continue to trend down, NAR expects about 1.5 million net new jobs in the next 12 months.
• Separately, the ISM manufacturing report showed no significant change for August. Although expectations were worse, the composite index fell only three tenths lower to a 50.6. A number above 50  indicates monthly expansion in the manufacturing sector, although in August it was a very small one. The lower composite index was led by lower employment and small contraction in production.
• The employment part fell to its lowest level since November 2009 at 51.8 from 53.5. Inventories increased to 52.3 from 49.3, but new orders rose only a hair to 49.6 from 49.2. Although showing very little change, a mere increase in new orders is positive news in light of a challenging August.
• Finally, data for construction spending released  today showed a decrease in July following a significant upward revisions for June. Construction spending declined 1.3 percent in July which was driven by a drop in public sector spending for both private residential and private nonresidential. Public construction fell 2.1 percent in July, while private residential spending declined 1.4 percent following alterations and improvements which had surged in recent months.
• New single-family construction spending inched up 0.1 percent, and new multifamily construction showed a stronger 1.4 percent increase. Non-new residential spending fell 2.9 percent. On a year-ago basis, overall construction spending improved 0.1 percent in July from 1.3 percent decline in June.