Employers continued to add workers, but the labor market has cooled. Here are the five things we learned from U.S. economic data released during the week ending September 1.
Payrolls expanded at a below average pace in August. Nonfarm payrolls swelled by a seasonally adjusted 187,000, according to the Bureau of Labor Statistics. This was an improvement from the 105,000 and 157,000 gains in June and July (which combined reflected a 105,000 downward revision from their previously reported estimates). The payroll gain also was well below the recent 271,000 monthly average. Private sector payrolls grew by 179,000 (up from 86,000 and 155,000 during the two previous months), split by goods-producing and service sectors by 36,000 and 143,000, respectively. Weekly earnings averaged $1,163.41, up 4.0 percent from a year earlier.
The separate household survey puts the unemployment rate at 3.8 percent, up 3/10ths of a percentage point from July. The labor market expanded by 736,000 people, leading to a 2/10ths of a percentage increase in the labor force participation rate to 62.8 percent. The 25-54 labor force participation rate edged up 1/10th of a percentage point to 83.5 percent (its highest point since 2002). The median length of unemployment held steady at 8.7 weeks. 4.221 million people held a part-time job but desired a full-time job (up 221,000 for the month). The broadest measure of labor underutilization grew by 4/10ths of a percentage point to a still-low 7.1 percent.
The number of unfilled jobs declined in July. The Bureau of Labor Statistics reports that there were a seasonally adjusted 8.827 million open jobs, a decline of 338,000 from June and 22.4 percent from a year earlier (but still well above pre-pandemic levels). The private sector had 7.866 million unfilled jobs, with professional/business services, health care/social assistance, and accommodation/food services having over a million open positions. Hiring also slowed, declining 167,000 to 5.773 million (-8.9 percent versus July 2022). The private sector hired 5.413 million workers in July. Job separations fell by 208,000 to 5.483 million (-6.5 percent versus July 2022). Layoffs held steady at 1.555 million (+3.9 percent versus July 2022), while voluntary quits decreased by 253,000 to 3.549 million (-11.6 percent versus July 2022).
3. Consumer spending accelerated in July. Real Personal Consumption Expenditures (PCE) rose 0.6 percent seasonally adjusted. The Bureau of Economic Analysis measure had increased 0.4 percent in June. Spending on goods jumped 0.9 percent, with gains for durables and nondurables at 1.4 percent and 0.7 percent, respectively. Services expenditures grew 0.4 percent. Without adjustments for inflation, nominal PCE increased 0.8 percent, funded by a 0.2 percent hike in nominal personal income and steady nominal disposable income. After inflation adjustments, real disposable income shrank 0.2 percent. The savings rate slumped to +3.8 percent. Real PCE has increased 3.0 percent over the past year, just below real disposable income’s 3.8 percent gain. The Federal Reserve’s preferred inflation measure—the PCE price index—grew 0.2 percent, as did the core price measure. Over the past year, the PCE price index has risen 3.3 percent, while the core measure was up 4.2 percent. Both were above the Fed’s two-percent inflation target.
Purchasing managers continued to report continued softness in manufacturing. The Institute for Supply Management’s Manufacturing PMI increased 1.2 points to 47.6. The Manufacturing PMI has below a reading of 50—indicative of a contracting manufacturing sector—for ten straight months. Indices for production (50.0) and employment (48.5) improved, while those for new orders (46.8) and inventories (44.0) declined. Five of 18 tracked manufacturing industries reported growth, led by printing, transportation equipment, and food/beverage. The press release noted that “demand remains soft.”
Consumer confidence wilted in August. The Conference Board’s Consumer Confidence Index plummeted 7.9 points to a seasonally adjusted 106.1 (1985=100), giving back all the gains it earned earlier in the summer. The same measure was at 103.6. The current conditions index declined 8.2 points to 144.8, while the expectations index shed 7.8 points to 80.2. 20.7 percent of survey respondents viewed current conditions as “good,” compared to 17.2 percent who said they were “bad.” 40.3 percent of consumers reported that jobs were plentiful, well above the 14.1 percent reporting that they were “hard to get.” The press release noted that deteriorating sentiment “was most notable” for higher-income and lower-income survey respondents.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending August 26, 2023, First-Time Claims, seasonally adjusted): 228,000, -4,000 vs. the previous week, +22,000 vs. the same week a year earlier). 4-week moving average: 237,500 (+13.0% vs. the same week a year earlier).
- Construction Spending (July 2023, Value of Construction Put in Place, seasonally adjusted annualized rate): $1.973 trillion (+0.7% vs. June 2023; +5.5% vs. July 2022).
- Pending Home Sales (July 2023, Index (2001=100), seasonally adjusted): 77.6 (+0.9% vs. June 2023; -14.0% vs. July 2022).
- S&P Case-Shiller Home Price Index (June 2023, National Index, seasonally adjusted): +0.9% vs. May 2023; Unchanged vs. June 2022.
- FHFA House Price Index (June 2023, Purchase-Only Index, seasonally adjusted): +0.3% vs. May 2023; +3.1% vs. June 2022.
- Agricultural Prices (July 2023, Prices Received by Farmers, not seasonally adjusted): -2.1% vs. June 2023; -7.0% vs. July 2022.
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What We Learned About the U.S. Economy Last Week 