Employers continue to add workers and would like to add a lot more. Here are the five things we learned from U.S. economic data released during the week ending August 4.
Payrolls continued to grow at a decent pace in July. Nonfarm payrolls expanded by a seasonally adjusted 187,000, following gains of 281,000 and 185,000 in May and June, respectively. The previous months’ estimates reflected the Bureau of Labor Statistics’ downward revisions of a combined 49,000, with all three estimates significantly under the monthly average job gain of 312,000 over the past year. Private sector employers added 172,000 workers to their payrolls, split between 154,000 in the service sector and 18,000 in the goods-producing side of the economy. Health care/social assistance was responsible for 87,100 of the added jobs. The average weekly earnings of $1,157.28 was up 3.5 percent from a year earlier.
The separate household survey has the unemployment rate falling back to its post-pandemic low of 3.5 percent and 152,000 people entering the labor force. The labor force participation rate held steady at 62.6 percent (July 2022: 62.1 percent). The 25-54 participation rate slipped by 1/10th of a percentage point to 83.4 percent (July 2022: 82.4 percent). Holding steady was the median length of unemployment at 8.7 weeks (July 2022: 8.3 weeks), while the number of part-time workers desiring a full-time job shrank by 191,000 to 4.000 million. The broadest measure of labor underutilization (the “U-6” series) dropped by 2/10ths of a percentage point to 6.7 percent (July 2022: 6.8 percent).
While fewer than recent, there remain a lot of unfilled jobs. The count of job openings declined by 34,000 in June to a seasonally adjusted 9.582 million. The Bureau of Labor Statistics measure was off 12.6 percent from a year earlier but also remained well above its 7.594 million 2019 pre-pandemic peak. The private sector was responsible for 8.452 million open positions, with professional/business services, health care/social assistance, and accommodation/food services each seeking to fill more than a million jobs. Hiring slowed by 327,000 to 5.905 million (-8.4 percent versus June 2022). Separations shrank by 288,000 to 5.637 million (-4.5 percent versus June 2022). This included 3.772 million people quitting their jobs (down 295,000 from the previous month and 9.3 percent from a year earlier) and layoffs narrowing by 19,000 to 1.527 million (+3.3 percent versus June 2022).
Factory orders rose in June, with aircraft leading the way. The Census Bureau estimates new orders for manufactured goods increased 2.3 percent to a seasonally adjusted $592.0 billion (its sixth gain in seven months). Transportation goods orders surged 12.0 percent, boosted by a massive gain for civilian aircraft. Net of transportation goods, orders inched up 0.2 percent. Factory orders over the first six months of 2023—$3.473 trillion—were 0.9 percent ahead of the comparable 2022 months. Shipments edged up 0.1 percent for the month to $573.9 billion and their thus far 2023 total of $3.445 trillion was up 0.8 percent from their 2022 comparable. Unfilled orders jumped 1.8 percent to $1.325 trillion and inventories slipped by less than 0.1 percent to $853.1 billion.
Purchasing managers say manufacturing activity contracted again in July. The Institute for Supply Management’s Manufacturing PMI added 4/10ths of a point to 46.4. The index has remained below 50.0—indicative of slowing manufacturing activity—for nine consecutive months. Measures for new orders, production, and inventories all rose (but remained under 50), while that for employment declined. Among 18 tracked sectors, only petroleum/coal products and furniture enjoyed growth during the month. The other 16 other industries reported declining activity. The press release noted, “[d]emand remains weak but marginally better compared to June.”
Meanwhile, the service sector grew at a slightly slower rate. The Services PMI lost 1.2 points in July to 52.7. The Institute for Supply Management’s measure has been above 50 for 37 of the past 38 months, including the most recent seven. Measures for business activity/production, new orders, employment, and inventories fell (but stayed above 50.0). Fourteen of 18 service sector industries expanded during the month, including construction, public administration, and management of companies/support services. The press release said that “[t]he majority of respondents are cautiously optimistic about business conditions and the overall economy.”
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending July 29, 2023, First-Time Claims, seasonally adjusted): 227,000, +6,000 vs. the previous week, +9,000 vs. the same week a year earlier). 4-week moving average: 228,250 (+5.8% vs. the same week a year earlier).
- Construction Spending (June 2023, Value of Construction Put in Place, seasonally adjusted annualized rate): $1.938 trillion (+0.5% vs. May 2023; +3.5% vs. June 2022).
- Productivity (2023Q2-preliminary, Nonfarm Business Labor Productivity, seasonally adjusted annualized rate): +3.7% vs. 2023Q1; +1.3% vs. 2022Q2.
- Vehicle Sales (July 2023, Autos and Light Trucks, seasonally adjusted): 15.657 million (+4.0% vs. June 2023; +20.0% vs. July 2022).
- Senior Loan Officers Opinion Survey
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What We Learned About the U.S. Economy Last Week 