- by New Deal democrat
I concluded last month’s post on construction spending by writing “Putting this report together with this morning’s other report on manufacturing from ISM, it appears the goods-producing part of the economy as a whole is very slightly contracting. It will be interesting to see if this is reflected in a decline in goods-producing jobs in Friday’s report.”
If anything, this morning’s construction spending report suggests a contraction that is a little less “slight,” as total construction spending (blue in the graph below) declined -0.7%, while residential construction spending (red, right scale) declined -0.5%:
Further, since on a nominal basis both series peaked exactly 12 months ago, on a YoY basis as well as on an absolute basis from peak, they have declined -3.5% and -6.5%, respectively:
Adjusting by the cost of construction materials, which again rose last month, the declines from peak are -8.9% and -10.4%, respectively:
If construction spending has declined more severely from peak, and manufacturing is in contraction as well, that amplifies somewhat the conclusion that the entire goods-producing sector of the US economy is in a downturn. In which regard, here is the latest update to industrial (blue) and manufacturing (red) production, indicating slight declines from peaks several months ago:
In answer to the question posed at the top of this post, last month there was indeed a slight -5,000 decline in goods-producing jobs. On Thursday we will find out if that continues for a second month.
