Help (Not As) Wanted: July 29 – August 2

Hiring slowed in July. Here are the five things we learned from U.S. economic data released during the week ending August 2.

A tepid employment report for July. Nonfarm payrolls grew by a seasonally adjusted 114,000, following gains of 216,000 and 179,000 in May and June, respectively. The Bureau of Labor Statistics report indicated that the private sector produced only a 97,000 increase in payrolls in July (versus 206,000 in May and 136,000 in June), with the service sector adding a net 72,000 workers. Healthcare/social assistance added 64,000 jobs, with leisure/hospitality adding another 23,000 net workers. Shedding jobs were information (-20,000), temporary health services (-8,700), and financial activities (-4,000). Average weekly wages of $1,199.39 was up 3.3 percent from July 2023.

A separate household survey shows that the unemployment rate jumped 2/10^ths of a percentage point to 4.3 percent (its highest mark since September 2021). 420,000 people poured into the labor market, leading to a labor force participation rate of 62.7 percent (up 1/10^th of a percentage point from June). The 25 to 54 participation rate jumped 3/10^ths of a percentage point to 84.0 percent (a 23-year high). The typical length of unemployment was 9.4 weeks (down 4/10^ths of a week from June), whereas there were 4.566 million part-time workers who sought a full-time job (down 346,000 from June). The broadest measure of labor underutilized (the U-6 series) jumped 4/10^ths of a percentage point to 7.8 percent).

Hiring slowed, and the number of open jobs slipped in June. The Bureau of Labor Statistics reports there were a seasonally adjusted 8.184 million open positions, down 46,000 for the month and 10.3 percent from a year earlier. The private sector had 7,090 million unfilled positions, with health care/social assistance, professional/business services, and leisure/hospitality, each with over a million open jobs. Hiring declined by 314,000 to 5.341 million jobs. Hirings were off 9.4 percent from a year earlier. Private sector employers hired 4.983 million workers (-9.6 percent versus June 2023). 5.095 million people separated from their jobs in June, down 298,000 for the month and 9.6 percent from June 2023. This included 3.282 million people quitting their jobs (-121,000 from May 2024 and -11.7 percent from June 2023) and 1.498 million layoffs (-180,000 from May 2024 and -5.7 percent from June 2023).

The Fed held still, but its tone changed. The statement released following the prior week’s Federal Open Market Committee (FOMC) meeting noted “solid” economic activity, “moderated” job gains, and “eased” but “somewhat elevated” inflation. The committee also felt that its inflation and employment goals” continue to move in better balance” and was now “attentive to the risk so both sides of its dual mandate.” This was a shift when prior statements emphasized the FOMC’s focus on inflation. Nonetheless, the committee voted unanimously to keep the fed funds rate at 5.25 – 5.50 percent and for the Fed to continue shedding Treasury and mortgage-backed securities from its holdings.

Factory orders fell in June. The Census Bureau estimates new orders for manufactured goods plummeted 3.3 percent to a seasonally adjusted $562.2 billion. Orders over the first half of 2024 were off 0.1 percent from the comparable 2023 months. Transportation orders slumped 20.6 percent, thanks to a sharp drop in civilian aircraft orders. Net of that, core factory orders inched up 0.1 percent. Shipments grew 0.5 percent to $588.0 billion. Factory shipments thus far in 2024 were 1.6 percent above the year-ago comparable. Unfilled orders shrank 1.4 percent to $1.384 billion, while inventories remained steady at $859.2 billion.

Manufacturing activity contracted in July. The Manufacturing PMI lost 1.7 points to a seasonally adjusted 46.8, its lowest reading since last November. This was 4^th straight month and the 20^th time in 21 months in which the Institute for Supply Management measure was below 50.0, indicative of a contracting manufacturing sector. Also declining were indices for new orders, production, employment, and inventories. A mere five of the tracked manufacturing industries reported growth, led by printing and petroleum/coal products. Industries dragging down manufacturing included primary metals, plastics/rubber products, and machinery. The press release noted, “[d]emand remains subdued, as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy.”

Other U.S. economic data released over the past week:

• Jobless Claims (Week ending July 27, 2024, First-Time Claims, seasonally adjusted): 249,000, +14,000 vs. the previous week, +9,000 vs. the same week a year earlier). 4-week moving average: 238,000 (+1.9 vs. the same week a year earlier).
• Conference Board Consumer Confidence (July 2024, Index (1985=100), seasonally adjusted): 100.3 (June 2024: 97.8; July 2023: 114.0)
• Vehicle Sales (July 2024, New Automobile and Light Truck Sales, seasonally adjusted annualized rate): 15.817 million (+4.2% vs. June 2024; -0.8% vs. July 2023).
• Construction Spending (June 2024, Value of Construction Put in Place, seasonally adjusted annualized rate): $2.148 trillion (-0.3% vs. May 2024; +6.2% vs. June 2023).
• Productivity (2024Q2-preliminary, Nonfarm Business Labor Productivity, seasonally adjusted annualized rate): +2.3% vs. 2024Q1; +2.7% vs. 2023Q2.
• Pending Home Sales (June 2024, Index (2001=100), seasonally adjusted): 74.3 (+4.8% vs. May 2024; -2.6% vs. June 2023).
• FHFA House Price Index (May 2024, Purchase-Only Index, seasonally adjusted): Unchanged vs. April 2024; +5.7% vs. May 2023.
• S&P Case-Shiller Home Price Index (May 2024, National Index, seasonally adjusted): +0.3% vs. April 2024; +5.9% vs. May 2023.
• Agricultural Prices (June 2024, Prices Received by Farmers, not seasonally adjusted): +2.5% vs. May 2024; -0.4% vs. June 2023.

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