Last Week in the News (January 12, 2009)

On Monday, January 5, the Commerce Department reported total construction spending fell 0.6% in the month of November. Economists had anticipated a much steeper drop of 1.3%. The primary cause for the drop was residential construction spending, which fell in November by 4.2% to a seasonally adjusted annual rate of $328.3 billion. Residential construction spending is down 23.4% from a year ago.

On Tuesday, the National Association of Realtors said pending sales for existing homes in November fell to the lowest level in the eight-year history of its index. The trade group said its seasonally adjusted index fell 4% to 82.3 in November from a revised 85.7 in October. Economists expected a reading of 88.

The Commerce Department reported factory orders declined by 4.6% in November, nearly double the 2.5% drop economists expected. Orders have been falling since August, with a 6% drop in October, the biggest decline in eight years. The report showed that demand for durable goods, items expected to last three or more years, fell a modest 1.5% in November. Durable goods dropped 8.5% in October. Demand for nondurable goods, items such as food, paper and petroleum products, dropped by 7.4% in November following a 3.8% decline in October.

The Labor Department said on Thursday the number of people continuing to claim jobless benefits rose by 101,000 to 4.61 million, above the 4.5 million economists expected.

On Friday, the Labor Department reported that the nation’s unemployment rate increased to 7.2% in December from 6.8% in November as businesses cut 524,000 jobs. Employers are also cutting workers’ hours. The average work week in December fell to 33.3 hours, the lowest level on record dating back to 1964.

In other news, the New York-based real estate data company Radar Logic Inc. reported that motivated sales, which include foreclosure auctions and banks selling homes taken over for non-payment, in the 25 largest U.S. metropolitan areas increased 193% between January 2008 to October 2008.

Upcoming on the economic calendar are reports on retail sales on January 14 and consumer inflation on January 16.