Flesh-Eating Week in Review
Jobs, construction spending, & more
Last week, we warned that the return of screwworm flies could devastate U.S. cattle herds. Sure enough, a screwworm was detected in a calf in Texas this week. The USDA will try to contain their spread, a task made more difficult by the fact that DOGE cut 25% of the Animal and Plant Health Inspection Service’s staff.1
(If you really want to be freaked out by this development, Google what a human screwworm case looks like.)
Flesh eating larvae aside, this week brought several strong data releases including on manufacturing, the labor market, and a lot more.
Monday
Construction Spending
Construction spending increased 0.4% in April and is up about 1% year over year.
Residential spending increased a healthy 0.8% for the month due to a sharp increase in single-family spending, though single-family investment remains subdued.
Nonresidential spending also increased slightly for the month, but that was entirely due to public sector activity. Private nonresidential spending actually decreased in April, although that was mostly because of manufacturing megaprojects winding down (a topic we covered at length in our post from yesterday).
ISM Manufacturing PMI
Manufacturing activity grew for the fifth straight month in May, according to this survey of industry purchasing managers (i.e., the people in charge of buying inputs). That’s the good news. The bad news is that the prices component remained sky-high, and high diesel prices are really starting to hurt, according to respondents’ comments.
Tuesday
Job Opening & Labor Turnover Survey (JOLTS)
The number of open, unfilled jobs rose sharply in April and is now at the highest level since May 2024.
More importantly, there’s now more than one job opening for every unemployed person for the first time since the middle of last year. This suggests the labor supply is tightening, and that could lead to faster wage increases over the coming months.
That increase aside, it remains a low-hire, low-fire, low-quit labor market. There just isn’t a lot of churn going on at the moment.
Oil Stuff
Both gas and diesel prices fell considerably during the week ending June 1st despite the Strait of Hormuz remaining closed. Oil prices are hovering in the low $90s, well below where they were over the past several weeks and way above where they were prior to the conflict in Iran.
Oil markets seem optimistic about a near-term resolution (or about the market’s ability to adjust to a long-term closure) and unconcerned by steadily falling crude oil stockpiles.
