Construction spending and construction employment look quite weak.
- Commercial construction spending was down 3.6% in April.
- Today’s horrendous job report (see Fed Hiking Not: Payroll Jobs +38K, Employed +26K, Labor Force -458K, Revisions -59K) shows back-to-back declines in construction employment.
Retail Hiring Slowdown Coming Up
On June 1, I reported Retail Hiring Slowdown Coming Up: Construction Spending Plunges 1.8%.
That was an educated guess, but I did not mean today!
Year-Over Year Numbers
The above table from Census.Gov.
My June 1 Comments
The volatility in this series is shocking, but many of the year-over-year numbers look very good.
Homebuilding did improve hugely, but we already knew that from the massive jump in new home sales.
On the negative side, the downbeat trend in business investment reflects on future hiring that will not happen.
Commercial spending is up 5.0% year-over-year. However, this month’s reading of -3.6% is foreboding.
Walmart, Target, and the fast food places will not hire for stores they are not building.
With minimum wage hikes scaling up to $15, and with retail profits collapsing, just why do retailers or fast food restaurants want to build new stores?
I concluded “It appears the Fed will be hiking rates smack into hiring slowdown (assuming of course the Fed really does hike).”
I did not believe then the Fed would hike, and I sure don’t believe it today.
On the amusing side of things, rate hike odds have collapsed and Chicago Fed president Charles Evans Discusses “Delays for Years” just after a parade of Fed presidents practically guaranteed a hike in June or July.
Retail Department Store Carnage
To further tie future employment and construction spending together, please see Retail Department Store Carnage: Amazon to Blame? Mish 12-Point Summation
Questions of the Day
- If commercial construction has slowed, with Walmart, McDonald’s, Target, etc., no longer building as many new stores, where is the hiring going to come from?
- Given massive hikes in minimum wages, coupled with a huge decline in retail store earnings, why shouldn’t construction spending and retail hiring slow?
Mike “Mish” Shedlock