This week started with daylight savings time ending on Sunday, which makes for an absolutely brutal couple of days (especially if you have young kids like Zack). Then, in the midst of an onslaught of economic data releases, came an impactful and frankly shocking midterm election (longer post on that here). Put it all together and, well, we’re tired.
Monday
Construction Spending
Construction spending fell sharply in September, but that was entirely due to a massive 5.4% decline in residential activity.
More specifically, it was due to an even more massive 13.0% decline in residential improvement and renovation spending; spending on new housing units actually increased slightly for the month. The size of that decline is suspiciously large. It could be due to surging borrowing costs, or it could be a statistical anomaly. We’ll know more next month.
On the nonresidential side of the industry: new month, same story. Data center spending surged another 8.6% and is up 90% year over year. Power-related spending also continues to grow. Otherwise, there’s not a lot of momentum out there.
ISM Manufacturing PMI
The manufacturing side of the economy grew for the 10th straight month, according to this survey of industry purchasing managers. As always, the most interesting part of this is the comments from respondents. This one from a chemical product manufacturer was particularly noteworthy:
“Negative, inflation, in the red’ are the three words or phrases that best describe our strategic sourcing for 2026. We generally assume inflation at 2 percent to 3 percent year over year, and we usually do a great job keeping costs under the 2-percent increase. This year, costs are up more than 6 percent, and we are not doing much to keep any of the spend categories under the target. Of the tracked items, only nine are lower, 24 are higher and six are neutral. The red is a bit disturbing. Despite the cost pressures, sales have been OK. It won’t be a great year. It’s hard to get excited about OK or just getting by. U.S. economic policy has suffered another year, making it impossible to make sound long-term decisions.”
Senior Loan Officer Opinion Survey
Banks tightened lending standards on net (in most categories) during the third quarter. Given what happened with rates, that’s not surprising.
Oil Stuff
Both gas and diesel prices fell this past week, and given the way oil prices dropped following the election (down about 10%), they’re probably going to keep falling.
Tuesday
Job Opening & Labor Turnover Survey (JOLTS)
The number of open, unfilled jobs rose to a five-month high in September. Workers quit their jobs at the fastest pace in over a year, while the layoff rate slowed. Put another way, it’s getting hard to find workers: there are 0.9 unemployed persons per open job. That’s fewer than in any month on record prior to 2018.
Midterm Elections
A Blue Tsunami brought Democrats wins in places that, even as of Tuesday morning, were unfathomable (looking at you, Mississippi). You can read our longer thoughts on that here.
