3rd quarter GDP; October’s jobs report; September’s income and outlays, construction spending, and JOLTS

Major economic reports that were released during the past week included the 1st estimate of 3rd quarter GDP and the September report on Personal Income and Spending, both from the Bureau of Economic Analysis, the Employment Situation Summary for October and the Job Openings and Labor Turnover Survey (JOLTS) for September, both from the Bureau of Labor Statistics, and a September report that revised metrics which were estimated in the week’s earlier release of 3rd quarter GDP: the September report on Construction Spending (pdf) from the Census Bureau…the week also saw the release of the last regional Fed manufacturing survey for October: the Dallas Fed Texas Manufacturing Outlook Survey, which covers Texas and adjacent western Louisiana and southeastern New Mexico, reported its general business activity index rose from –9.0 in September to –3.0 in October, indicating that a smaller plurality of Texas area manufacturers continued to see deteriorating business conditions in October, even as they also reported that the production index rose 18 points to +14.6, its highest reading in more than two years…

This week also saw the release of the Chicago Fed National Activity Index (CFNAI) for September, a weighted composite index of 85 different economic metrics, which decreased to –0.28 in September from -0.01 in August, after the August index was revised down from the +0.10 reported for August last month…that left the most ofter cited 3 month average of the CFNAI at –0.19 in September, down from from a revised -0.14 in August, which, as a negative number, would indicate that national economic activity had been below the historical trend over the summer months...

Privately issued reports included the ADP Employment Report for October, which indicated an increase of 233,000 private sector jobs, the light vehicle sales report for October from Wards Automotive, which estimated that vehicles sold at a 16.04 million annual rate in October, up from the 15.77 million annual sales rate reported for September, and up from the 15.50 million annual sales rate of October a year ago, and the widely watched manufacturing purchasing manager’s survey from the Institute for Supply Management (ISM): the October Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) fell to 46.5% in October, down from 47.2% in September, which indicates that a larger plurality of manufacturing purchasing managers reported worse conditions in various facets of their business in October than a month earlier…the week also saw the widely watched Case-Shiller Home Price Index for August, an index generated by averaging repeat home sales prices from June, July and August against a January 2000 baseline, and which reported that their national home price index for those 3 months averaged 0.1% lower than the index generated from May, June and July home sales prices, but still 4.2% higher than their price index generated by repeat home sales prices during the June, July and August period of a year earlier…

Employers Added a Net 12,000 Jobs in October, Unemployment Rate at 4.1%

The Employment Situation Summary for October indicated the smallest increase in payroll jobs since January 2021, that the unemployment rate was unchanged at 4.1%, that the labor force participation rate was 0.1% lower, and that the employment rate was 0.2% lower…estimates extrapolated from the seasonally adjusted establishment survey data projected that employers added 12,000 jobs in October, after the previously estimated payroll job change for September was revised from an increase of 254,000 jobs to one of 223,000, and the payroll jobs increase for August was revised from 159,000 to 78,000, revisions which mean that this report actually shows 100,000 fewer payroll jobs than were reported last month….meanwhile, the unadjusted data shows that there were actually 826,000 more payroll jobs extent in October than in September, as the normal seasonal job increases in the education and retail-related sectors were washed out of the headline number by the seasonal adjustment…

Note that this month’s report was impacted by Hurricane Helene, which made landfall on September 26 and devastated businesses in 7 US states, and Hurricane Milton, which crossed Florida on October 9th while this month's employment surveys were being conducted…the BLS statement on the impact of those hurricanes reads “It is likely that payroll employment estimates in some industries were affected by the hurricanes; however, it is not possible to quantify the net effect on the over-the-month change in national employment, hours, or earnings estimates because the establishment survey is not designed to isolate effects from extreme weather events..

Seasonally adjusted job increases in October were concentrated in the health care and the government sectors, while a payroll job decrease of 44,400 in the manufacturing of transportation equipment was strike related…since the BLS summary of the job gains by sector is clear and more detailed than our usual synopsis, we’ll again just quote from that summary here:

• Total nonfarm payroll employment was essentially unchanged in October (+12,000), following an average monthly gain of 194,000 over the prior 12 months. In October, employment continued to trend up in health care and government. Temporary help services lost jobs. Employment declined in manufacturing due to strike activity. (See table B-1.)
• Health care added 52,000 jobs in October, in line with the average monthly gain of 58,000 over the prior 12 months. Over the month, employment rose in ambulatory health care services (+36,000) and nursing and residential care facilities (+9,000).
• Employment in government continued its upward trend in October (+40,000), similar to the average monthly gain of 43,000 over the prior 12 months. Over the month, employment continued to trend up in state government (+18,000).
• Within professional and business services, employment in temporary help services declined by 49,000 in October. Temporary help services employment has decreased by 577,000 since reaching a peak in March 2022.
• Manufacturing employment decreased by 46,000 in October, reflecting a decline of 44,000 in transportation equipment manufacturing that was largely due to strike activity.
• Employment in construction changed little in October (+8,000). The industry had added an average of 20,000 jobs per month over the prior 12 months. Over the month, nonresidential specialty trade contractors added 14,000 jobs.
• Employment showed little or no change over the month in other major industries, including mining, quarrying, and oil and gas extraction; wholesale trade; retail trade; transportation and warehousing; information; financial activities; leisure and hospitality; and other services.

The establishment survey also showed that average hourly pay for all employees rose by 13 cents an hour to $35.46 an hour in October, after increasing by a revised 11 cents an hour in September, and is now up 4.0% over the past year; meanwhile, the average hourly earnings of production and nonsupervisory employees increased by 12 cents an hour to $30.48 an hour…employers also reported that the average workweek for all private payroll employees was unchanged at 34.3 hours, while hours for production and non-supervisory personnel was down by a tenth of an hour at 33.7 hours…at the same time, the manufacturing workweek down by a tenth of an hour to 39.9 hours, while average factory overtime fell by 0.1 hour to 2.8 hours…

Meanwhile, the October household survey indicated that the seasonally adjusted extrapolation of those who would report being employed fell by an estimated 368,000 to 161,496,000, while the estimated number of those unemployed and looking for work increased by 150,000 to 6,984,000; and hence the labor force decreased by a rounded net of 220,000….since the working age population had grown by 209,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by a rounded 428,000 to 100,809,000….the decrease in the labor force was enough to lower the labor force participation from 62.7% to 62.6%, which was also down from 62.7% in October a year ago…in addition, the decrease in number employed was enough to lower the employment to population ratio, which we could think of as an employment rate, from 60.2% in September to 60.0% in October, which was also down from 60.2% year earlier…however, the corresponding increase in the number unemployed was not enough to cause the unemployment rate as a percentage of the labor force to increase, as it remained at 4.1%…meanwhile, the number of those who reported they were forced to accept just part time work fell by 67,000, from 4,624,000 in September to 4,557,000 in October, which left the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, unchanged at 7.7% of the labor force in October…

Like most reports from the Bureau of Labor Statistics, the employment situation press release itself is easy to read and understand, so you can get more details on these two reports from there…note that almost every paragraph in that release points to one or more of the tables that are linked to on the bottom of the release, and those tables are also on a separate html page here that you can open it along side the press release to avoid the need to scroll up and down the page..

3rd Quarter GDP Grew at a 2.8% Rate on Greater Consumer and Defense Spending, and Exports

Our economy grew at a 2.8% rate in the 3rd quarter, a bit slower than the 3.0% growth rate of the second quarter, as increase​​d consumer outlays for goods and services, increased exports, and an expansion of government were partly offset by weaker fixed investment, slower inventory growth, and increased imports, which subtracts from what was added by other GDP components….the Advance Estimate of 3rd Quarter GDP from the Bureau of Economic Analysis estimated that the real output of goods and services produced in the US grew at a 2.8% annual rate over the output of the 2nd quarter, when our real output grew at a 3.0% rate….in current dollars, our third quarter GDP grew at a 4.673% annual rate, increasing from what would work out to be a $29,016.7 billion a year output rate in the 2nd quarter to a $29,349.9 billion annual rate in the 3rd quarter, with the headline 2.8% annualized rate of increase in real output arrived at after annualized GDP inflation adjustments averaging 1.8% were computed from the price changes of the GDP components and applied to their current dollar change….

As is usual with an advance estimate, the BEA cautions that the source data is incomplete and also subject to revisions, which have averaged +/-0.6% in either direction before the third estimate for the quarter is released, which will be two months from now…also note that September construction, September trade in services, and non-durables factory inventory data had not yet been reported or formally estimated, and that the BEA assumed a $10.0 billion annualized decrease in exports of services, a $6.9 billion annualized decrease in imports of services, a $1.7 billion monthly increase in residential construction, a $1.8 billion monthly decrease in non-residential construction, a $0.7 billion decrease in public construction, and a $0.4 billion decrease in nondurable manufacturing inventories for September before they estimated the 3rd quarter’s output (see Key source data and assumptions (xls) for more details)

While we review the details for the 3rd quarter below, remember that the news release for GDP reports all quarter over quarter percentage changes at an annual rate, which means that they’re expressed as a change that’s a bit ​m​ore than 4 times of that what actually occurred over the 3 month period, and that the prefix “real” is used to indicate that each change has been adjusted for inflation using price indexes chained from 2017 prices, and then that all percentage changes in this report are calculated from those ‘2017 dollar’ figures, which would be better thought of as a quantity indexes than as any reality based dollar amounts….for our purposes, all the data that we’ll use in reporting the changes here comes directly from the pdf for the 1st estimate of 3rd quarter GDP, which we find linked on the BEA GDP landing page, which also provides links to just the tables on Excel and other technical notes on this report…specifically, we refer to table 1, which shows the real percentage change in each of the GDP components annually and quarterly since the 4th quarter of 2020, table 2, which shows the contribution of each of the components to the GDP figures for those quarters and years; table 3, which shows both the current dollar value and inflation adjusted value of each of the GDP components; and table 4, which shows the change in the price indexes for each of the GDP components…

Personal consumption expenditures (PCE), which represents the goods and services produced for consumers and accounts for ​a​lmost 70% of GDP, grew at a 5.23% rate in current dollars in the 3rd quarter, which worked out to a rounded 3.7% real growth rate of consumed goods and services after the 3rd quarter’s annualized 1.5% PCE price index increase was computed from price changes of the PCE components and used to adjust that nominal personal spending for inflation….consumer outlays for durable goods grew at a 5.57% rate, but average prices of those durable goods fell at a 2.4% rate, and from that, the BEA figured that the real growth of the output of consumer durables grew at a 8.1% rate, as an increase in real consumption of motor vehicles and parts at a 9.7% rate accounted for more than a third of the growth in durable goods output…at the same time, consumer spending for non-durable goods grew at a 3.64% rate, which was adjusted for prices that fell at an average 1.2% rate, and hence the real output of consumer non-durable goods increased at a 4.9% rate, as greater real consumption of nondurable goods other than groceries, clothing, and gasoline accounted for more than two-thirds of the growth in nondurable goods output…. meanwhile, the quarter’s 5.66% nominal growth rate in consumer outlays for services was deflated by a 3.0% increase in prices for personal services to show that the real output of consumer services grew at a rounded 2.6% annual rate, as the food services and accommodations component grew at a 3.9% rate and accounted for nearly 20% the quarter’s broad based growth in services…as a result of those changes in growth from the 2nd to the 3rd quarter, the increase in real consumption of durable goods added 0.58 percentage points to the GDP growth rate, the ​real increase in non-durable goods​ proced foe consumers added 0.67 percentage points, and increased consumption of ​personal services added 1.21 percentage points to the growth rate of GDP in the 3rd quarter…

The change in other components of the change in GDP are computed by the BEA in the same manner as we have just illustrated for computing the PCE components; ie, in each case, the annualized percentage increase in current dollar spending for the quarter is adjusted with the annualized inflation factor for that component, yielding the percentage change in real units of goods or services produced during the quarter, at an annual rate…..thus, after inflation adjustments, real gross private domestic investment, which had grown at a 8.3% annual rate in the 2nd quarter, grew at a 0.3% annual rate from those levels in the 3rd quarter, as real growth in fixed investments grew at an 1.3% annual rate in the 3rd quarter, after growing at a 2.3% rate in the 2nd quarter, while the increase in growth of private inventories was slower in the 3rd quarter than in the 2nd quarter​ and hence reduced GDP….among the fixed investment categories, real nonresidential fixed investment grew at a 3.3% rate, even though real investment in non-residential structures shrunk at a 4.0% rate and subtracted 0.13 percentage points from 3rd quarter GDP, as real investment in equipment grew at 11.1% rate and and added 0.56 percentage points to GDP, and real investment in intellectual property grew at a 0.6% rate and added 0.05 percentage points to GDP…however, real residential investment shrunk at a 5.1% rate in the 3rd quarter, after shrinking at a 2.8% rate in the 2nd quarter, and subtracted 0.21 percentage points from 3rd quarter GDP, and thus lowered the overall fixed investment component growth rate to 1.3%….for an easy to read table as to what’s included in each of those GDP investment categories, see the NIPA Handbook, Chapter 6, page 3.

Meanwhile, real private inventories grew at an inflation adjusted $60.6 billion rate over the 3rd quarter, after growing at an inflation adjusted $71.7 billion rate in the 2nd quarter, and as a result the $11.5 billion negative change in real inventory growth subtracted 0.17 percentage points from the 3rd quarter’s growth rate, after a $53.9 billion positive change in real inventory growth in the 2nd quarter had added 1.05 percentage points to that quarter’s GDP. However, since lower growth in inventories indicates that less of the goods produced during the quarter were left in storage or sitting on a shelf, the $11.5 billion decrease in their growth in turn means real final sales of GDP were greater by that amount, and hence real final sales of GDP grew at a 3.0% rate in the 3rd quarter, up from the real final sales growth rate of 1.9% in the 2nd quarter, when greater inventory growth meant that much of what was produced during the quarter wasn’t sold…

Both real exports and real imports increased during the third quarter, but our imports increased by more, and hence the net of our international trade was a subtraction from GDP….Our real exports of goods and services grew at a 8.9% rate in the third quarter, after growing at a 1.0% rate in the 2nd quarter, while our real imports grew at a 11.2% rate in the third quarter, after growing at a 7.8% rate in the 2nd quarter. As you might recall, increases in exports are added to GDP because they represent a part of our production that was not consumed or added to investment in our country (& hence not counted in the GDP computation elsewhere), while increases in imports ​are subtract​ed from GDP because they represent either consumption or investment that was added to another GDP component that shouldn’t have been, because that portion was not produced here. Thus the 3rd quarter increase in real exports added 0.94 percentage points to 3rd quarter GDP, after the 2nd quarter increase in exports had added 0.12 percentage points to second quarter GDP. On the other hand, since imports subtract from GDP, their increase at a 11.2% rate subtracted 1.49 percentage points from 3rd quarter GDP, after the second quarter import increase had subtracted 1.01 percentage points from that quarter’s growth….As a result, our worsening trade balance subtracted a rounded net of 0.56 percentage points from the 3rd quarter’s GDP growth, after our second quarter trade imbalance had subtracted 0.90 percentage points from GDP growth in that quarter..

Finally, real consumption and investment by the government sector increased at a 5.0% annual rate in the 3rd quarter, after growing at a 3.1% rate in the 2nd quarter, as real federal government consumption and investment grew at a 9.7% rate, while real state and local consumption and investment grew at a 2.3% rate. Inflation adjusted federal spending for defense grew at a 14.9% rate, the largest increase since 2003, and that added 0.51 percentage points to 3rd quarter GDP growth, while real non-defense federal consumption and investment grew at a 3.2% rate and added 0.09 more percentage points to GDP. Note that federal government outlays for social insurance are not included in this GDP component; rather, they are included within personal consumption expenditures only when such funds are spent on goods or services, indicating an increase in the output of those goods or services. Meanwhile, real state and local government investment and consumption expenditures, which grew at a 2.3% annual rate, added 0.25 percentage points to the quarter’s growth rate, as an increase in real state and local investment at a 2.2% rate accounted for 0.05 percentage points of the state and local increase…

September Personal Income Rose 0.3%, Spending Rose 0.5%, PCE Price Index Rose 0.2%; Savings Rate Fell to 4.6%

Thursday’s release of the September Income and Outlays report was concurrent with the GDP release on Wednesday, and all the PCE data in the 3rd quarter GDP report we just reviewed actually originated from the data in this report…and like that GDP report, all the dollar values reported here are seasonally adjusted and at an annual rate, ie, they tell us what income, spending and saving would be for a year if September’s adjusted income and spending were extrapolated over an entire year…however, the percentage changes are computed monthly, from one annualized figure to the next, and in this case of this month’s report they give us the percentage change in each annualized metric from August to September….

Thus, as they now partly explain in the opening line of the news release for this report “Personal income increased $71.6 billion (0.3 percent at a monthly rate) in September…“, which means that the annualized figure for all types of personal income in September, $24,947.9 billion, was $71.6 billion, or almost 0.3% more than the annualized personal income figure of $24,876.3 billion for August; the actual increase in personal income from August to September, which is about one-twelfth that amount, is not given….similarly, disposable personal income, which is income after taxes, rose by less than 0.3%, from an annual rate of $21,798.3 billion in August to an annual rate of $21,855.8 billion in September…the monthly contributors to the change in personal income, which can be seen in the Full Release & Tables (PDF) for this release, are thus also annualized…in September, the main contributors to the $71.6 billion annual rate of increase in personal income were a annualized $57.4 billion increase in wages and salaries, an annualized $19.4 billion increase in government social benefits to persons, and an $11.8 billion annualized increase in supplements to wages and salaries, such as employer contributions to pension funds, while farm proprietors' income fell at an $11.5 billion annual rate and interest and dividend income saw a $6.8 billion annualized decrease…

Meanwhile, seasonally adjusted personal consumption expenditures (PCE) for September, which were included in the change in real PCE in the 3rd quarter GDP report, rose at a $105.8 billion annual rate to a $20,024.3 billion pace of consumer spending annually, more than 0.5% above that of August, after August‘s PCE was revised up from the previously reported annual rate of $19,897.1 billion to $19,918.4 billion….the current dollar increase in September personal spending included a $72.1 billion annualized increase to an annualized $13,736.0 billion in spending for services, and a $33.7 billion increase to $6,288.2 billion in annualized spending for goods….total personal outlays, which includes interest payments and personal transfer payments in addition to PCE, rose by an annualized $106.3 billion to $20,855.7 billion in September, which left personal savings, which is disposable personal income less total outlays, at a $1,000.1 billion annual rate in September, down from the revised $1,048.9 billion in annualized personal savings in August…as a result, the personal saving rate, which is personal savings as a percentage of disposable personal income, fell to 4.6% in September, down from 4.8% in August, and the lowest personal savings rate since June 2022…

While our personal consumption expenditures accounted for 68.9% of our third quarter GDP, before they could be used in that measurement of the change in our national output, they first needed to be adjusted for inflation, to give us the real change in consumption, and hence the real change in the goods and services that were produced for that consumption…..that adjustment was made using the price index for personal consumption expenditures, also included in this report, which is a chained price index based on 2017 prices = 100….from Table 5 in the pdf for this report, we find that the PCE price index rose from 123.713 in August to 123.930 in September, giving us a month over month PCE inflation rate of +0.1754%, which the BEA reports as a 0.2% increase….also in this report, Table 7 gives us a year over year PCE price index increase of 2.1%, and a core price increase, excluding food and energy, of 2.7% for the past year, both still above the Fed’s 2% inflation target….applying the September inflation adjustment to the change in September PCE shows that real PCE was up 0.35564%, which BEA reports as a 0.4% increase in their summary table.. .note that when those PCE price indexes are applied to a given month’s annualized current dollar PCE, it yields that month’s annualized real PCE in chained 2017 dollars, which aren’t really dollar amounts at all, but merely the means that the BEA uses to compare one month’s or one quarter’s real goods and services produced to another….those monthly figures are shown in table 4 of the report PDF, and are ultimately used to compute the contribution of real personal consumption of goods and services to GDP…

Job Openings and Job Quitting Fell in September, Hiring and Layoffs Rose

The Job Openings and Labor Turnover Survey (JOLTS) report for September from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 418,000, from 7,861,000 in August to 7,443,000 openings in September, after August’s job openings were revised 179,000 lower, from 8,040,000 to 7,861,000…September jobs openings were also 20.0% lower than the 9,307,000 job openings reported for September a year ago, as the job opening ratio expressed as a percentage of the employed fell from 4.7% in August to 4.5% in September, and was down from 5.6% in September a year ago…the largest percentage job opening changes included a 85,000 job opening increase to 349,000 openings in finance and insurance, a 54,000 job opening decrease to 293,000 openings in transportation, warehousing, and utilities and a 79,000 decrease to 424,000 job openings in state and local government, excluding education (see table 1 for more details)…like most BLS releases, the press release for this report is easy to understand and also refers us to the associated table for the data cited, which are then linked to at the end of the release…

The JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and ‘other separations’, which includes retirements and deaths….in September, seasonally adjusted new hires totaled 5,558,000, ​u​p by ​123,000 from the revised​ 5,435,000 who were hired or rehired in August, as the hiring rate as a percentage of all employed ​r​ose from 3.4% in August to 3.5% in September, ​b​ut was down from the 3.7% hiring rate of September a year earlier (details of hiring by sector since March are in table 2)….meanwhile, total separations rose by 28,000, from 5,168,000 in August to 5,196,000 in September, while the separations rate as a percentage of the employed was unchanged at 3.3% in September, while it was also down from 3.5% in September a year ago (see table 3)…subtracting the 5,196,000 total separations from the total hires of 5,558,000 would imply an increase of 362,000 jobs in September, somewhat more than the revised payroll job increase of 223,000 jobs for September reported in the October establishment survey, with the some of difference possibly due to the difference in the dates of the surveys, which is month end for this report, while it’s the week of the 12th for the employment situation surveys..

Breaking down the seasonally adjusted job separations, the BLS finds that 3,​0​71,000 of us voluntarily quit our jobs in September, down by ​1​07,000 from the revised​ 3,178,000 who quit their jobs in August, while the quits rate, widely watched as an indicator of worker confidence, fell from 2.0% in August to 1.9% in September, and was also down from 2.3% in September a year earlier (see details in table 4)….in addition to those who quit, another 1,833,000 were either laid off, fired or otherwise discharged in September, up by 165,000 from the revised 1,668,000 who were discharged in August, as the discharges rate rose from 1.0% to 1.2% of all those who were employed during the month, which was also up from the discharges rate of 1.0% a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 292,000 in September, down from 322,000 in August, for an ‘other separations rate’ of 0.2%, which was the same as in August and​ as in September of last year….both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release…

Construction Spending Rose 0.1% in September, Revisions Boost Q3 GDP by 24 Basis Points

The Census Bureau’s report on construction spending for September(pdf) estimated that the month’s seasonally adjusted construction spending would work out to $2,148.8 billion annually if extrapolated over an entire year, which was 0.1 percent (±1.2 percent)* above the revised annualized August estimate of $2,146.0 billion, and 4.6 percent (±1.6 percent) above the estimated annualized level of construction spending in September of last year…the annualized August construction spending estimate was revised nearly 0.7% higher, from $2,131.9 billion to $2,146.0 billion, while the annual rate of construction spending for July was revised more than 0.4% higher, from $2,133.9 billion to $2,143.14 billion, which combined meant that the 0.1% decrease that was reported for August a month ago was flipped to a 0.1% increase….for the first nine months of this year, construction spending amounted to $1,463.5 billion, which was $1,621.4 billion, 7.3 percent​ (±1.2 percent) above the $1,511.4 billion billion spent on construction over the same period in 202​3…

A further breakdown of the different subsets of construction spending is provided in a Census summary, which precedes the detailed spreadsheets:

• Private Construction -Spending on private construction was at a seasonally adjusted annual rate of $1,653.6 billion, virtually unchanged from (±0.5 percent)* the revised August estimate of $1,653.2 billion. Residential construction was at a seasonally adjusted annual rate of $913.6 billion in September, 0.2 percent (±1.3 percent)* above the revised August estimate of $912.2 billion. Nonresidential construction was at a seasonally adjusted annual rate of $740.0 billion in September, 0.1 percent (±0.5 percent)* below the revised August estimate of $741.0 billion.
• Public Construction - In September, the estimated seasonally adjusted annual rate of public construction spending was $495.2 billion, 0.5 percent (±1.8 percent)* above the revised August estimate of $492.9 billion. Educational construction was at a seasonally adjusted annual rate of $104.2 billion, 0.3 percent (±2.1 percent)* above the revised August estimate of $103.9 billion. Highway construction was at a seasonally adjusted annual rate of $141.0 billion, 0.5 percent (±4.4 percent)* above the revised August estimate of $140.3 billion.

Construction ​spending for all three months of the 3rd quarter was higher than was indicated in the GDP report issued two days earlier. The BEA’s key source data and assumptions (xls) that accompanied the 3rd quarter GDP report indicates that they had estimated that September’s residential construction would increase by an annualized $1.7 billion from the previously published August figures, that nonresidential construction would decrease by an annualized $1.8 billion from last month’s report, and that September’s public construction would decrease by an annualized $0.7 billion from last month’s report….hence, the total of the figures used by the BEA for total September construction in the 3rd quarter GDP report were a net $0.8 billion lower than the previously published August figure…since this morning’s report indicates that September construction spending was up by $2.8 billion from an August figure that was revised $14.1 billion higher, that means that the net September construction figures used in the GDP report were a total of $17.7 billion too low…averaging that underestimation with the $14.1 billion upward revision to August construction spending and the $9.2 billion upward revision to July’s construction spending means the aggregate annualized nominal construction figures used in the 3rd quarter GDP report were roughly $13.7 billion too low, suggesting there will be an upward revision of about 0.24 percentage points to 3rd quarter GDP to account for what the construction spending report shows…(note: that could be off by a bit if there’s a large shift in the inflation adjustments among the revised construct​ion figures)

 

 

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)