On a negative note, job creation slowed for the second month in a row, as the economy added 142,000 jobs in September after adding a revised 136,000 in August, while the jobless rate held at 5.1%. The labor force participation rate slid to 62.4% – the lowest since October 1977 – as 350,000 people dropped out of the labor force.
Construction spending continued to gain in August, rising .7% as residential construction increased 1.3% and non-residential construction rose .3%. Hotel construction surged – lodging construction rose 41% on a yearly basis.
Manufacturing grew at the slowest pace in two years in September, as the ISM manufacturing index dropped to 50.2%, the weakest reading since May 2013. Measures of new orders and employment both fell. Of the 18 industries that are tracked by ISM, just 7 said that business expanded in September.
The private sector added 200,000 jobs in September, with construction leading the way, adding 35,000 workers, according to the ADP Employment Report. Just two sectors, energy and manufacturing, eliminated jobs. The low cost of oil forced energy producers to trim jobs, and manufacturers cut 15,000 jobs – the most in almost five years.
Pending home sales slipped 1.4% in August, falling to the lowest level in five months. According to the National Association of Realtors, “Pending sales have leveled off since mid–summer, with buyers being bounded by rising prices and few available and affordable properties within their budget. Even with existing–housing supply barely budging all summer and no relief coming from new construction, contract activity is still higher than earlier this year and a year ago. The possibility of a government shutdown and any ongoing instability in the equity markets could cause some households to put off buying for the time being. Furthermore, adapting to the changes being implemented next month in the mortgage closing process could delay some sales”.
Consumer confidence edged up in September, according to the Conference Board: “Consumers’ more positive assessment of current conditions fueled this month’s increase…Consumers’ expectations for the short-term outlook, however, remained relatively flat, although there was a modest improvement in income expectations. Thus, while consumers view current economic conditions more favorably, they do not foresee growth accelerating in the months ahead”.
Consumer spending rose .4% in August, driven by car and truck purchases and back-to-school shopping. At the same time, inflation was flat for the month.