Market Recap: Construction Spending Up, New Purchase Apps Improve, ADP Employment Grows
Mortgage rates held steady this week. Construction spending improved after the previous month’s declines. New purchase applications increased, but refinance applications declined. The ADP employment report was not hurt greatly by Hurricanes Harvey and Irma, but still trended downward.
US construction spending tracks the total amount spent on private and public construction projects. Housing focuses on residential construction spending, but all construction activity triggers economic momentum through the purchase of materials and job creation. In August, US construction spending improved by 0.5%, after two months of declines. Damage from Hurricanes Harvey and Irma is likely a contributing factor.
The Mortgage Bankers Association (MBA) releases a weekly survey of new purchase and refinance applications. For the last week of September, new purchase applications improved 1.0% and refinance applications declined 2.0% for a composite decrease of -0.4%. Mortgage application data had been skewed in recent weeks due to delays related to Hurricanes Harvey and Irma.
The ADP employment report is based on a survey of data from 400,000 privately-owned companies employing approximately 23 million people. Hurricanes Harvey and Irma have been impacting employment data with sharp increases in unemployment claims and delays in reporting from Texas and Florida. In September, the ADP reported the addition of 135,000 jobs, down from August’s addition of 237,000 jobs.
Construction and jobs data continues to be distorted due to recovery from Hurricanes Harvey and Irma. As the Southeast, particularly Florida and Texas, continue to clean up and rebuild, construction spending is expected to increase and jobs-related reports are likely to normalize.
Sources: Bloomberg, MarketWatch, Mortgage News Daily, Reuters