Real average wages and decline, while real aggregate payroll gains remain below peak

 

 - by New Deal democrat

With the report on September inflation yesterday, we can update two measures of how well average American workers are doing: real average wages and real aggregate payrolls.

Nominally wages increased 0.2% for the month. With consumer prices up 0.4%, real wages declined -0.2%:

Real wages had been in an increasing trend since gas prices peaked in June 2022. Now that the decelerating trend in headline inflation has ended, that trend has ended as well. The initial peak right after the pandemic is somewhat illusory. It is a side-effect of the fact that during the pandemic lockdowns many more low wage workers (like in restaurants and bars) lost their jobs than white collar office workers. The September 2021 peak is more realistic. Real wages are down -1.5% since then.

Real aggregate payrolls for nonsupervisory workers tell us how much purchasing power the working and middle classes have as a whole. When it falls below inflation on a YoY% basis, it has been an excellent coincident marker for the onset of a recession going back 60 years:

There have been no false positives, and no false negatives.

As you can see, last year the lines got very close (about 1.5% apart) before inflation decelerated faster. Now that the deceleration in headline inflation has ended, even as the deceleration in wage gains has cointinued, the lines have gotten a little closer again, with YoY growth in nominal payrolls just over 2.0% better than inflation.

Of course, before YoY real aggregate payrolls turn negative (i.e., lower than inflation) real aggregate payrolls must necessarily peak. Here’s the historical 60 year graph of that:

Again, there is a perfect record, with peaks on average about 6 months before the onset of a recession. But not *every* peak, no matter how minute, leads to recession, which is why the YoY comparison is more meaningful.

Nevertheless, with the deceleration in payroll gains vs. inflation, real aggregate payrolls are down -0.4% from their July peak for the 2nd month in a row:

The longer we go without a new high in real aggregate payrolls, the closer the metric will come to its crossover point.

Except for fictitious shelter and vehicle repairs, September inflation was moderate

 

 - by New Deal democrat

With the main exception of fictitious shelter, consumer inflation in September remained relatively subdued, but as anticipated has stopped decelerating. First I’ll look at the headlines, then the problem children.

Total inflation (blue in the graph below) rose 0.4% for the month, but only 0.3% less food and energy (red). Less shelter (gold) it rose only 0.1%:

On a YoY basis, total inflation was up 3.7%, core inflation up 4.1%, and ex-shelter up 2.0%:

In other words, as I have been saying all this year, since shelter makes up 1/3rd of the total index, and 40% of core, almost all of the elevated core and total readings can be attributed to fictitious shelter. 

Shelter itself rose 0.6% in September, “hot” compared with the last few months, although below its monthly readings one year ago:

More importantly, here’s my update of shelter (blue) and OER (light blue) YoY vs. the Case Shiller (red) and FHFA (gold) house price indexes:

OER and shelter generally took longer than house prices to rise to peak, and appear to be taking a similarly leisurely trip back down - but back down they will continue to go for roughly the next 12 months.

As an aside, here is the latest national rent report from Apartment List, showing a YoY decline of -1.2%:

Aside from shelter, the *only* categories up 4.0% or higher YoY were food away from home (restaurants), up 6.0%, and transportation services (auto insurance and repairs), up 9.1%.

New vehicle prices rose 0.3% in September, and used vehicle prices continued their cliff-diving, down -3.0%. But transportation services rose 0.7%:

On a YoY basis, new vehicles are now only up 2.5%, and used vehicles are *down* -8.0%. But transportation services are up 9.1%:

The story here is that repair parts cost more than they did before vehicle prices shot up, so insurance prices have had to increase sharply as well. Meanwhile many millions of owners are compensating by holding on to their older vehicles longer. These older vehicles need more, and more costly, repairs, driving those prices higher as well.

Nonsupervisory wages have actually kept up with new car prices since the pandemic began, but used car prices are still about 16% higher in real terms:

Basically, since I sharply discount fictitious shelter, with the exception of new vehicles, insurance, and repairs, the inflation news in September was benign.

Consumers will probably nevertheless continue to decry inflation, because their mortgage and monthly car payments remain sky high compared with the last decade.

The good news continues on initial claims

 

 - by New Deal democrat

I’ll parse the CPI report later this morning, but first, let’s update initial jobless claims.

Initial claims were unchanged at 209,000 this week. The 4 week moving average fell -3,000 to 206,240. With a one week lag, continued claims rose 30,000 to 1.702 million:

As usual, the YoY% changes are more important for this metric. And here, the news was pretty good as well. Initial claims were only up 1.5%, the more important 4 week average up 6.2%, while continuing claims were up 28.5%:

With the exception of continuing claims, these are not pre-recessionary readings.

As you may recall, I suspect there is some unresolved post-pandemic seasonality in these numbers. Although I won’t post a graph, in September last year claims averaged 190,500. In October they rose to 201,400. In November they rose further to 212,500.

With just one week of October in, the number is 3.8% higher than last year’s monthly average. If we do indeed have unresolved seasonality, I would expect claims to rise to roughly 220,000 or higher this month. We’ll see.

September producer prices confirm economic tailwind has ended

 

 - by New Deal democrat

My strong suspicion has been that the tailwind of declining commodity prices, typified by the big decline in gas prices in late 2022 is what allowed the US economy to grow so well so far this year, blunting the effects of major Fed interest rate hikes. For the last several months, my focus has been whether that decline is over.

This morning’s producer price report added more evidence that indeed producer prices have bottomed.

Commodity prices increased 0.5% in September:

They are up 1.9% since June:

Final demand prices for goods (blue) increased 0.2%, and final demand services prices (gray) increased 0.3% for the month:

Final demand goods prices are up 2.1% since June. Final demand prices for services are up 1.4%:

This returns to the more normal situation with producer and commodity prices. Historically, as seen in this 100 year graph of commodity prices YoY, typically there are big declines during recessions. This reflects a decline in demand:

But if you focus on more recent declines since the 1980s, you can see a number of incidents - 1986, 1997-98, and 2014-15 - where the big declines in commodity prices were dominated by declining gas prices, which put more money in consumers’ pockets to spend on other things. In all of these cases, there was no recession.

The nearly 10% decline in commodity prices between June 2022 and June 2023 was the biggest 12 month decline yet driven by lower gas prices, as well as the un-kinking of pandemic-related supply chains. Except for the very unlikely scenario that current  geopolitical events drive a further decline in gas prices, that is almost certainly over.

This is probably going to be reflected in tomorrow’s report on consumer prices as well. Remember, if consumer inflation simply stops decelerating, it will lessen the gap between prices and aggregate consumer income, meaning slower economic growth at least.

A note on Middle Eastern turmoil and gas and oil prices

 

 - by New Deal democrat

While we wait for producer and consumer inflation data later this week, here’s a note about gas prices.

With the newest shock in the Middle East, conventional wisdom is that the price of oil and gas will spike. And maybe they will, but the truth is, because of the involvement of both market and geopolitical players, nobody really knows.

Remember that Russia’s invasion of Ukraine in February last year caused gas prices to rise from $3 to $5 a gallon by June. And then they went right back down to $3 by last December.

Here’s a graph of oil prices for the past year, with this morning’s current price as I write this called out at the far right:

Gas prices ended last Friday at roughly $82.82 a barrel, and have risen over $3 a barrel so far this morning. But a week before prices were over $90 a barrel. So we haven’t even challenged that level yet.

Maybe oil prices will go over $100 a barrel because of this latest turmoil, if the petrosheikhdoms of the Middle East decide they have to put pressure on the West to in turn put pressure on Israel. Or maybe they will sit on their hands, and maybe oil slides back towards $70 a barrel.

The point is, nobody really has a clue. And even if prices move sharply in one direction in the next month or two, they may move right back shortly thereafter.

Scenes from the September jobs report: a look at leading indicators

 

 - by New Deal democrat

Today is a holiday, so no new economic news. So let’s take a look at some of the leading indicators I was tracking last week for the employment report, and some leading indicators for the economy within that report itself.

In the JOLTS report for August last week, quits rose slightly from their 30 month low set in July, leaving the declining trend intact. Since the quits rate has historically led the YoY% change in wages, I anticipated a further deceleration in wage growth, and that did happen, as YoY wage growth declined from 4.5% to 4.3%:

Meanwhile, initial jobless claims for the month of September were higher by 10.4%, indicating that the YoY% change in the unemployment rate should tend towards 3.8% or 3.9%:

The unemployment rate did indeed “stick” at 3.8%, unchanged from August. Here’s what the absolute levels of claims and the unemployment rate look like:

I suspect that initial claims will rebound this month, but we’ll see. If they remain lower, that would bode well for the unemployment rate in coming months.

The one trend that did not continue in September was deceleration in job growth, particularly on a 3 month basis. Here’s what the YoY% change in growth looks like monthly (blue) vs. quarterly (red):

What is particularly impressive is that the leading jobs sectors of construction and goods-producing as a whole have continued to improve. Manufacturing jobs also increased in the past two months, and for the past year are about flat, but have not declined in any meaningful fashion:

Within construction, residential building jobs also rebounded in the past couple of months and are generally flat for the past year, while nonresidential construction jobs have continued to increase and civil engineering construction jobs have increased sharply:

The one leading jobs sector which has continued to decline is temporary help, but even there it is possible that the 2021-22 surge was the actual anomaly, as shown in the below graph showing the past 20 years:

Another leading indicator, indeed one of the 10 components of the “official” Leading Index is the manufacturing workweek. In the post-WW2 period through the 1970s, any significant decline generally meant a recession was near at hand. But since 1983, a ar age factory hours have usually been well above the “full” 40 hour work week. Only declines to below roughly 40.5 hours a week have been consistent more often that not with recessions. To show that, below are the YoY change in the average factory workweek (red) vs. the absolute level of average hours, minus 40.5 hours (blue):

There have been many YoY declines in the workweek, but most of those where the workweek remained above 40.5 hours did not result in actual recessions.

Finally, let’s take a look at the fundamentals-based comparison of aggregate nonsupervisory payrolls YoY vs. consumer inflation YoY. Remember that when the former is less than the latter, it is a nearly perfect coincident indicator of recession:

Real aggregate payrolls consistently increased in the first part of this year (i.e., the lines got further apart). Unsurprisingly, the economy improved. YoY nominal aggregate payrolls have continued to decelerate, and I expect that trend to continue. The important question is whether YoY CPI also continues to decelerate, or whether that trend has ended. I suspect the latter is true, but much will have to do with the immediate future course of energy prices.

The bottom line for now is, we simply haven’t seen a widespread downturn in the leading sectors within the jobs report., although there are signs that the decelerating trend is likely to continue, despite September’s strong showing.

Weekly Indicators for October 2 - 6 at Seeking Alpha

 

 - by New Deal democrat

My Weekly Indicators post is up at Seeking Alpha.

While interest rates have continued to rise to multi-decade highs, shorter term indicators continue to chug right along, both on the producer and the consumer side.

As usual, clicking over and reading will bring you up to the virtual moment on the data, and reward me a little bit for my efforts at organizing it.

An excellent headline jobs number may mask unresolved seasonality, while unemployment weakness “stuck” at a higher level

 

 - by New Deal democrat

As per my reporting earlier this week, my focus this month was on whether wage and jobs growth continue to decelerate, and whether the unemployment rate would remain “sticky” at its higher, 3.8%, rate.

Two of those three came to pass. The third, jobs growth, emphatically did not! But it may well have been the result of the same unresolved seasonality that we have seen with initial jobless claims in the past month.

Here’s my in depth synopsis.

HEADLINES:

• 336,000 jobs added. This is the highest since January. 
• July and August were both revised higher, by +79,000 and +40,000, respectively. This is the first time we have seen such upward revisions all this year. As a result, the 3 month moving average rose to 266,000 from a revised 193,000, the highest since March.
• Private sector jobs increased 263,000. Government jobs increased by 73,000. Only January and July were higher in the past 12 months.
• On the other hand, the alternate, and more volatile measure in the household report rose by only 86,000 jobs. The YoY% gain in this report is +1.7%.
• The U3 unemployment rate remained at 3.8%, tied with last month for the highest since February 2022 . The civilian labor force, the denominator in the figure, rose only slightly (by 90,000), and the numerator, the number of unemployed, rose very slightly  (by 5,000).
• The U6 underemployment rate declined -0.1% to 7.0%, but still close to the highest since May 2022. 
• Further out on the spectrum, those who are not in the labor force but want a job now rose 80,000 to 5.450 million, vs. its post-pandemic low of 4.925 million set this past March.

Leading employment indicators of a slowdown or recession

These are leading sectors for the economy overall, and help us gauge how much the post-pandemic employment boom is shading towards a downturn.  These were mainly positive:

• the average manufacturing workweek, one of the 10 components of the Index of Leading Indicators, was unchanged at 40.7, equal to its lows earlier this year and down -0.8 hours from its February 2022 peak of 41.5 hours.

• Manufacturing jobs rose by 17,000.
• Within that sector, motor vehicle manufacturing jobs rose 8,900. 
• Construction jobs increased by 11,000.
• Residential construction jobs, which are even more leading, rose by 6,700. There has been a sharp rebound in the past two months, but so far It continues to appear likely that January was the peak for this sector.
• Goods jobs as a whole rose 29,000. These should decline before any recession occurs. They remain up 1.6% YoY, which remains a very good pace compared with most of the last 40 years.

• Temporary jobs, which have generally been declining late last year, declined further, by -4,200, and are down -233,600 since their peak in March 2022.
• the number of people unemployed for 5 weeks or less declined -170,000 to 2,051,000.

Wages of non-managerial workers

• Average Hourly Earnings for Production and Nonsupervisory Personnel increased $.06, or +0.2%, to $29.06, a YoY gain of +4.3%. This is the lowest since June 2021.

Aggregate hours and wages: 

• the index of aggregate hours worked for non-managerial workers increased 0.2%, and is up 1.2% YoY, a slight uptick from July’s recent low of 1.1%, which was the lowest since March 2021.

•  the index of aggregate payrolls for non-managerial workers rose 0.4%, and increased 5.7% YoY, a -0.1% decline from last month, and the lowest since March 2021. Nevertheless this is significantly above the inflation rate, meaning average working class families have more buying power.

Other significant data:

• Leisure and hospitality jobs, which were the most hard-hit during the pandemic, rose 96,000, -184,000, or -1.1% below their pre-pandemic peak.
• Within the leisure and hospitality sector, food and drink establishments rose 6100, and for the first time ever exceeded their pre-pandemic peak, by almost 30,000.
• Professional and business employment rose 21,000. These tend to be well-paying jobs, But this series has been decelerating, and is currently up 1.2% YoY, its lowest YoY gain since March 2021.
• The employment population ratio was unchanged at 60.4%, vs. 61.1% in February 2020.
• The Labor Force Participation Rate was also unchanged at 62.8%, vs. 63.4% in February 2020.

SUMMARY

As is so often the case, this month was a tale of two very divergent reports. The establishment report was excellent, both in headline jobs and in most of its internals, including almost all the leading jobs sectors. Food and drink establishments finally exceeded their pre-pandemic levels. Although it showed continued slow deceleration in terms of aggregate hours and pay growth, at +0.4% this month the latter almost certainly exceeded the inflation rate, meaning average Americans got more spending money in their pockets last month. If there was a fly in the ointment, it was that government jobs accounted for an outsized percentage of all the growth. This may well be of a piece with the big declines in initial jobless claims all last month, which I suspect had to do with a change in the post- vs. pre-pandemic patterns.

On the other hand, the household report was lackluster, with a meager 86,000 jobs gain. Both the unemployment and underemployment rates “stuck” close to or at their highs from last month.

So: there was continued deceleration in wage gains, and higher un- and under-employment rates “stuck,” But the monthly gain in jobs was very good. I should point out, however, that Q4 job growth last year deviated seasonally to the downside compared with pre-pandemic trends. I suspect we may see some of the same this year as well.

Very strong initial jobless claims probably the result of unresolved post-pandemic seasonality

 

 -  by New Deal democrat

It continues to be reasonably clear that there is some unresolved post-pandemic seasonality in initial jobless claims, which nose-dived last September and rebounded during October. So far the same pattern is evident this year.

To wit, initial claims rose 1,000 last week to 207,000. The more important 4 week moving average declined -2,500 to 208,750. With a one week lag, continuing claims declined -1,000 to 1.664 million:

More importantly for forecasting purposes, YoY initial claims were up 4.5%, the 4 week average up 9.4%, and continuing cliams up 27.8%:

This is the best YoY showing in several months.

On a monthly basis, in September initial claims rose 10.4% YoY. Since initial claims lead the unemployment rate by several months, this implies that the average unemployment rate by the end of this winter is likely to be approximately 4.0% (i.e., one year ago the average unemployment rate was 3.6%; 3.6*1.104 = 4.0):

Since the monthly YoY change is the most important comparison, we remain just barely into “yellow caution flag” territory. We’ll see if last year’s seasonal increase in jobless claims in October happens again this year (I think it will).

In the meantime, the implication for tomorrow’s jobs report is that last month’s jump in the unemployment rate from 3.5% to 3.8% is likely largely to “stick.” We might see a decline to 3.7%, but I strongly suspect the months of 3.5% or even 3.4% unemployment rates are over. Additionally, per my writing earlier this week, I am expecting YoY nonsupervisory wage gains to decelerate, and there is every reason to believe the deceleration in jobs gained monthly will decelerate as well, at least on a 3 month average basis. 

The current economic “big picture”: by no means are we out of the woods

 

 - by New Deal democrat

There is no particularly important economic news out today, so let me take this opportunity to step back and give you more of a “big picture” view of my current thinking.

To the extent there is a consensus, it is that a recession has been avoided and a “soft landing” of low inflation and positive jobs and income news will continue. So far, the first is true, but I am increasingly skeptical of the second.

As you know by now, I track “long leading indicators,” background economic conditions that set the stage for what will happen a year or more ahead; “short leading indicators,” which generally turn about 3 to 12 months before the economy as a whole does, and “coincident indicators,” which mark the turn itself.

So let me start that by noting that while there have been recent rebounds in both the short leading indicators, the long leading indicators have remained negative. Perhaps most noteworthy, the Fed has given no indication that it is about to “pivot” to lowering interest rates. In fact, in the past 6 months interest rates in the form of bond yields have risen about 1.5%. Most importantly, here are mortgage rates, which are now the highest since late October in the year 2000:

As of yesterday, a new 30 year mortgage averaged 7.72%.

What this means is that a prospective home buyer with a 3% interest rate, paying $1000/month interest currently, would see that monthly interest payment rise to $2575/month if they bought a home for the exact same price.

Unsurprisingly, this has all but killed the mortgage market. As of this morning, purchase mortgage applications made a new 28 year low; they haven’t been this low since 1995:

Although I won’t repeat the graph, while they backed off a little last month we have seen repeated new all-time highs in multi-family building construction (apartments and condos), which are something of “substitute goods” for a single family home. To see why apartment buildings in particular might continue to be built at a rapid clip, here is a graph of CPI for rent of primary residence (i.e., an apartment or other rental unit):

While this has increased 18.8% since before the pandemic, that means a previous $1000 payment on average has increased to $1188, compared with the $2575 for a comparable new mortgage payment as shown above.

Nevertheless I suspect that this building spree has peaked. If the building of multi-unit dwellings turns down, we will see a further downward drag on the construction sector as a whole.

Another long leading indicator, corporate profits, got some positive press last week as nominally the final revision for Q2 showed that they rose 0.8%. The problem here is that the actual leading indicator requires that they be deflated by unit labor costs. Here’s what that looks like:

So adjusted, corporate profits declined slightly in Q2, and are only 0.3% higher than Q4 of last year.

Turning to the short leading indicators, meanwhile manufacturing is still down compared with where it was in 2022, and is up only 0.4% since January of this year, as indicated by the relevant industrial production index:

Recall that vehicle manufacturing has been the standout positive in this sector, and is a specific short leading indicator as well. After home purchases, it has typically been the next consumer sector to turn down. As to which, let’s re-run the graph from yesterday showing that vehicle sales of both heavy trucks as well as sedans and SUV’s may have peaked several months ago:

Part and parcel of this is that the interest rates for auto loans have also risen sharply:

If construction and manufacturing are faltering, we would expect the stock market to take notice (and despite the well-known fact that “the stock market is not the real economy,” nevertheless it is a well-known if volatile short leading indicator). In that regard it is noteworthy that the stock market recently failed to surpass its January 2022 high, and in the past month has turned back down:

Finally let’s look at consumer spending. Real consumer spending on goods has typically peaked shortly before or after the onset of a recession. Here’s the long term view:

So far not only has this not turned down, but it is 2.2% higher than it was one year ago.

The weekly retail series I track, Redbook, also recently had a rebound, and is currently higher YoY by 3.9%:

Much of the consumer rebound - indeed of the economy as a whole - has been the decline of gas prices from $5/gallon in June 2022 to about $3.05 at the end of last year. Although oil prices recently made a new 12 month high over $90/barrel, gas prices at the pump have not followed (probably having to do with the switch from summer to winter fuel blends):

On Friday we’ll get the latest update on employment. As I noted yesterday in discussing the JOLTS report, the trend decline in voluntary quits indicates that the YoY gains in wages will continue to decelerate. For the past 24 months, the 3 month average in employment gains has also decelerated from roughly +0.4% per month to +0.1% per month:

Based on the leading indicators discussed above, I expect that to continue. If job gains continue to decelerate, and wage gains continue to decelerate, aggregate payrolls will decelerate. Meanwhile inflation looks like to continue at least a stabilized levels. This means that real aggregate payrolls could peak in the next few months, a very accurate sign of an oncoming recession.

In short, while at the moment things look relatively rosy, by no means do I think we are out of the woods.

August JOLTS report: a pause in deceleration, but the trend remains intact

 

 - by New Deal democrat

Last month I concluded my post on the July JOLTS report’s sharp declines by noting that “None of these statistics move in a straight line, so it would be a mistake to project this report’s relatively big moves forward. But the trend clearly remains in place.”

This month’s report for August showed that was the case, as all of the major metrics improved, most slightly, but openings strongly. Nevertheless, the decelerating trend continues to remain in place.

Openings increased 590,000 to 9.610 million, the highest in three months. Actual hires increased 35,000 to 5.857 million, and quits increased 19,000 to 3.638 million. Below I show all three series normed to their average as of the three months before the pandemic hit:

As you can see, openings are still up a very strong 38.0% since then, while quits are up only 3.1%, and hires are actually *down* -2.0%.

In short, for all intents and purposes both hiring and quitting are back to where they were in normal times before the pandemic, while openings - which are always suspect because many companies keep fictitious openings posted as a matter of routine - remain very elevated.

Layoffs and discharges, similarly measured, declined all of -1,000 to 1.680 million, a decline of -11.7% compared with their pre-pandemic average:

Note, however, that all 4 metrics discussed above - openings, hires, layoffs, and quits - are receding from their post pandemic highs (and low in the case of layoffs). In other words, the decelerating trend remains intact.

Finally, last month I premiered a comparison of the quits rate and average hourly earnings. This is because the former has a 20+ year history of leading the latter, which I have in the past described as a “long lagging” indicator that turns well after the turns in most other metrics. Here’s the update of that comparison:

The quits rate was flat compared with the prior month, but as with the other JOLTS series, the decelerating trend remains intact. This means that wages should follow with continued deceleration, on the order of -0.1%-0.2% measured YoY. This suggests that on Friday YoY nonsupervisory wages will likely decelerate to 4.4% or 4.3% YoY. 

Manufacturing and construction have the most positive reports all year

 

 - by New Deal democrat

As usual, the monthly data starts out with reports on the two most important production sectors of the economy, namely manufacturing (for September) and construction (for August). For a change, the news was mainly positive.

Let’s start with manufacturing. The ISM’s diffusion index, where any value below 50 indicates contraction, came in negative for the 11th month in a row for the total index, and the 13th month in a row for new orders (not shown):

How is that consistent with the news being “mainly positive?” Because both numbers were the highest this year, with the total improving +1.2 to 49.0, and new orders improving +2.4 to 49.2. The ISM itself has indicated that numbers above 48 typically are *not* associated with recessions.

In other words, across all sectors manufacturing may still be contracting, but only slightly. And because this is a diffusion index, and vehicle manufacturing has been improving this year, the news has probably been better on a $ weighted basis than based on this diffusion.

If there is a fly in the ointment here, it is in the aforesaid vehicle manufacturing. Data for sales of passenger vehicles and heavy trucks are both reported with a 4 week delay, meaning we got August’s report last Friday.

And here, we see that both sectors turned down in August. In particular, heavy weight truck sales have been declining since May:

The possible peak in heavy truck sales is most important because historically heavy truck sales turn down first - and decisively - in advance of recessions:

In general, a downturn from peak of more than -10% in heavy truck sales has been signal rather than noise. We’re not quite there, but it’s getting close.

Now let’s look at the other leading sector of construction. Here the news was totally positive, as both total and residential construction improved on both a nominal and real basis. Nominally total construction spending made another all-time high, while residential construction spending was the higher since last October:

Since the cost of construction materials actually declined -0.1% in August, in real terms the results were even slightly better, although total construction spending has not surpassed its post-pandemic peak:

In sum, while there are several soft spots warranting caution, this was the most positive set of manufacturing and construction reports so far this year.