The labor market continued to sizzle this summer. Here are the five things we learned from U.S. economic data released during the week ending August 5.
Payrolls finally caught up to pre-pandemic levels. The Bureau of Labor Statistics reports that nonfarm payrolls expanded by a seasonally adjusted 528,000 in July. That gain (and an upward revision to May and June data of 30,000) puts payrolls (now at 152.536 million) above their February 2020 estimate. Private sector employers swelled by 471,000 workers, with the biggest adds in health care/social assistance (+96,600), leisure/hospitality (+96,000), and professional/business services (+89,000). Average weekly earnings of $1,116.54 were up 4.6 percent from a year earlier.
Based on a separate survey of households, the unemployment rate fell to a pandemic low of 3.5 percent. 63,000 people left the labor market in July as the labor market participation rate slipped by 1/10th of a percentage point to 62.1 percent. The number of people who held part-time jobs but wanted a full-time opportunity rose by 303,000 to 3.924 million. Holding steady were the median length of unemployment (8.5 weeks) and the broadest measure of labor underutilization (the U-6 series at 6.7 percent). Both also were at pandemic-lows.
While shrinking, there remain a lot of open jobs. The Bureau of Labor Statistics estimates that there were a seasonally adjusted 10.698 million open jobs on the final day of June. This was down 605,000 from May and the fewest reported since September 2021. Industries with the biggest declines in available positions were retail, wholesale trade, and state/local government. Hiring slowed by 133,000 to 6.374 million, with professional/business services and accommodation/food services each adding more than a million workers. 5.931 million workers separated from their jobs during the month, down 86,000 from May. Voluntary quits held steady at 4.238 million people, while layoffs slowed by 87,000 to 1.327 million.
Purchasing managers indicate resiliency in the manufacturing and service sectors during July. The PMI, the headline index from the Institute for Supply Management’s Manufacturing Report on Business, slipped by 2/10ths of a point to 52.8. While at its lowest reading since the early days of the pandemic, the PMI has been above 50.0 (indicating expansion) for 26 consecutive months. While the new orders and production indices lost ground in July, measures for employment and inventories improved. Eleven of 18 tracked industries expanded during the month, led by apparel, nonmetallic mineral products, and petroleum/coal.
Meanwhile, the Services PMI added 1.4 points in July to 56.7. As mentioned above, the ISM measure also has been above 50.0 for 26 straight months. Measures for business activity/production, new orders, and employment improved, while that for inventories slumped. Thirteen of 18 tracked service industries reported growth in July, led by mining, real estate, and public administration.
Factory orders and shipments rose in June. According to the Census Bureau, new orders for manufactured goods grew 2.0 percent to a seasonally adjusted $555.2 billion, per the Census Bureau. Both durable and nondurable goods orders gained 2.0 percent, while civilian nonaircraft capital goods orders increased 0.7 percent. Factory orders thus far in 2022 were 13.5 percent ahead of their year-ago pace. Shipments jumped 1.1 percent to $551.9 billion, with gains for durables and nondurables of +0.3 percent and +2.0 percent, respectively. Year-to-date shipments were 13.8 percent above its year-ago comparable. The value of unfilled orders swelled 0.7 percent to $1.118 trillion. Inventories expanded 0.4 percent to $801.5 billion.
Higher exports led to a smaller trade deficit in June. Exports increased 1.7 percent to $260.8 percent and imports slowed by 0.3 percent to $340.4 billion. The resulting trade deficit of -$79.6 billion represented a 6.2 percent decline for the Census Bureau and the Bureau of Economic Analysis measure. The trade deficit thus far this year (-$535.0 billion) was a third larger than that of the first six months in 2021. The June goods deficit shrank by $4.9 billion to -$99.5 billion and the services surplus increased by $0.3 billion to +$19.9 billion. The former reflected larger exports of industrial supplies/materials (including nonmonetary gold and natural gas) and food/feeds/beverages, along with a slowdown in imported motor vehicles. The U.S. had its largest goods deficits with China, the European Union, Vietnam, Mexico, and Canada.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending July 30, 2022, First-Time Claims, seasonally adjusted): 260,000, -6,000 vs. the previous week, -154,000 vs. the same week a year earlier). 4-week moving average: 254,750 (-37.9% vs. the same week a year earlier).
- Construction Spending (June 2022, Value of Construction Put in Place, seasonally adjusted annualized rate): $1.762 trillion (-1.1% vs. May 2022; +8.3% vs. June 2021).
- Vehicle Sales (July 2022, Light Trucks and Autos, seasonally adjusted annualized rate): 13.347 million (+2.6% vs. June 2022; -9.0% vs. July 2021.
- Senior Loan Officers Opinion Survey
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What We Learned About the U.S. Economy Last Week 