A Rate Hike, Construction Spending, & JOLTS

Week in Review: Oct. 31 - Nov. 4

Anirban, who’s on the road giving presentations, wrote a Week in Review post today, but due to a series of failed file attachments and never-sent emails, that post is now forever lost in the ether. His review was probably poignant and humorously insightful, but we’ll never know for sure. These tech issues, along with a significant lack of capital, are why we haven’t spent eleven figures to acquire a social network.

Monday

Alignable Small Business Rent Delinquency

According to a survey from Alignable, 37% of U.S. small business owners couldn’t pay their rent in full and on time in October, up from 30% in September. This is still lower than in August, when the delinquency rate was 40%.

But that’s according to Alignable, which I’d never heard of before stumbling onto this. Frankly, 37% seems too high (bordering on implausible?), so interpret with some caution. Anyway, this will be an interesting indicator to track over time. You can see a more detailed breakdown by industry and state if you click the link above.

Tuesday

Manufacturing Indices

The S&P Global US Manufacturing PMI and the ISM Manufacturing PMI both indicate that the domestic manufacturing industry expanded in October, but that’s about where the good news ends. Both indices showed new orders falling for the month, so the expansion was due to manufacturers working through backlog, not getting new business.

Both measures show inflationary pressures starting to ebb but demand softening at a rapid clip, which supports Anirban’s prediction of recession in 2023.

Job Opening & Labor Turnover Survey (JOLTS)

The number of job openings increased in September, up to about 10.7 million. That’s about 3.7 million more than there were before the pandemic. The quit rate was unchanged for the month, meaning 2.7% of all employees left their job in September, higher than in any month from 2000 (when they started tracking it) to the start of the pandemic. Just 0.9% of all employees were laid off or discharged, lower than at any point from 2000 to 2020. It looks like Elon is making an effort to increase the layoff rate for November.

Job openings are key measure of labor scarcity—if we had more workers, we’d have fewer open, unfilled jobs—so we (and the Fed) would prefer to see this falling.

You can read what Anirban had to say about this release over at Associated Builders and Contractors.

Construction Spending

Overall construction spending inched higher in September and is up 10.9% year over year. Residential spending was unchanged for the month, and nonresidential rose 0.5%. With average mortgage rates so high, it’ll be a bumpy road ahead for the residential sector, and spending in the nonresidential sector is still below February 2020 levels (and that’s in nominal terms; construction input costs are up more than 40% since the start of the pandemic).

There is one blindingly bright spot, and that’s manufacturing-related construction spending, which is up 46.3% since the start of the pandemic. The story about reshoring manufacturing capacity is very real.

Again, more from AB over at Associated Builders and Contractors.

Wednesday

Fed Interest Rate Decision