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Market Recap: No Rate Hike, Construction Spending Drops, ADP Falls Short
Posted On May 05, 2017
Mortgage rates decreased slightly, following the Federal Open Market Committee’s decision to not raise the benchmark interest rate. US construction spending showed gains in residential construction, but not much elsewhere and the ADP employment report posted modest gains.
US construction spending slowed in March, following February gains. Month-over-month spending was down 0.2%, but year-over-year spending was up 3.6%. While overall spending was flat, residential spending drove gains, up 7.3% from last year. Construction spending tends to be volatile from month to month and some housing experts suggest the late winter snow storm impacted March numbers.
The ADP employment report tracks hiring trends based on 400,000 private-sector businesses using the ADP payroll system. In April, job growth failed to meet expectations with the addition of 177,000 jobs. Only three of the ten sectors increased hiring: manufacturing, aerospace, and automotive and transport.
The Federal Open Market Committee (FOMC) met Tuesday and Wednesday of this week. According to the statement following the meeting, labor market growth remained strong but household spending increased more modestly. In general, economic activity has slowed and the FOMC voted to leave rates unchanged.
While the ADP employment report did not meet expectations, the FOMC stated that job growth was still strong. Some economists are forecasting a hiring rebound coming soon and a rate hike as early as June.