The labor market cooled down in the heat of the summer. Here are the five things we learned from U.S. economic data released during the week ending September 6.
Payroll growth wobbled again in August. Nonfarm payrolls increased by a seasonally adjusted 142,000, an unexceptional count but an improvement over downwardly revised estimates for June (+118,000) and July (+89,000). The Bureau of Labor Statistics report has the private sector adding a net 118,000 jobs, including 108,000 in the private sector. Industries shedding workers included manufacturing, retail, and temporary help services. Adding the most workers were health care/social assistance (+44,100) and the government (+24,000). Average weekly earnings of $1,207.70 were up 3.5 percent from a year earlier.
A separate survey of households has the unemployment rate slipping 1/10th of a percentage point to 4.2 percent. In August, 120,000 people entered the job market, as the labor force participation rate remained at 62.7 percent. The 25 to 54 labor force participation rate edged down 1/10th of a percentage point to 83.9 percent. The typical length of unemployment remained steady at 9.4 weeks, while the number of part-time workers seeking full-time employment rose by 264,000 to 4.830 million. The broadest measure of labor underutilization (the “U-6” series) added 1/10th of a percentage point to 7.9 percent.
Job openings fell to a 3.5 month-low in July. The Bureau of Labor Statistics reports there were a seasonally adjusted 7.673 million unfilled jobs, down 237,000 from June and 12.9 percent from a year earlier. 6.749 million job openings were in the private sector, with more than a million unfilled positions in trade/transportation/utilities, professional/business services, and health care/social assistance. Hiring picked up in July, growing by 273,000 to 5.521 million (-3.7 percent versus July 2023). 5.420 million people separated from their jobs, up 336,000 for the month but off 4.0 percent from a year earlier. 3.277 million people quit their jobs in July, up 63,000 for the month but down 9.3 percent from a year earlier. Layoffs jumped by 202,000 to 1.762 million (+3.8 percent versus July 2023).
Manufacturing activity remained soft in August. The Manufacturing PMI added 4/10ths of a point to a seasonally adjusted 47.2. The Institute for Supply Management measure has been below 50.0—the threshold between an expanding and contracting manufacturing sector—for five straight months and 21 times over the past 22 months. While measures for new orders and production both fell, those for employment and inventories improved. Only five of 17 tracked manufacturing industries reported growing in August, led by primary metals, petroleum/coal products, and furniture. The press release noted that demand was “weak” and output “declined.”
The service sector expanded in August. The ISM’s Services PMI inched up 1/10th of a point to a seasonally adjusted 51.5. The Services PMI has been above 48 times over the past 51 months, including three of the past five months. Whereas measures for new orders and inventories improved, those for business activity/production and employment declined. Ten of 17 tracked service sector industries expanded in August, led by arts/entertainment/recreation, mining, and transportation/warehousing. Survey respondents noted “slow-to-moderate growth” with “ongoing high costs and interest-rate pressures” cited by some purchasing managers.
The trade deficit widened in July. The Census Bureau and the Bureau of Economic Analysis report that exports grew 0.5 percent to a seasonally adjusted $266.6 billion, while imports swelled 2.1 percent to $345.4 billion. The resulting deficit of -$78.8 billion was up 7.9 percent from June. The trade deficit thus far this year (-$505.3 billion) was up 7.7 percent over the comparable 2023 months. The goods deficit rose $5.6 billion to -$103.1 billion, and the services surplus narrowed $0.2 billion to +$24.3 billion. The former reflects smaller exports of automobiles and consumer goods and increased imports of computer accessories and industrial supplies/materials. The U.S. had its largest goods deficits with China, the European Union, Mexico, Vietnam, and Taiwan.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending August 31, 2024, First-Time Claims, seasonally adjusted): 227,000, -5,000 vs. the previous week, -1,000 vs. the same week a year earlier). 4-week moving average: 230,000 (-3.3% vs. the same week a year earlier).
- Factory Orders (July 2024, New Orders for Manufactured Goods, seasonally adjusted): $592.1 billion (+5.0% vs. June 2024; +3.8% vs. July 2023).
- Vehicle Sales (August 2024, Auto and Light Truck Sales, seasonally adjusted annualized rate): 15.131 million (-4.5% vs. July 2024:
- Construction Spending (July 2024, Value of Construction Put in Place, seasonally adjusted annualized rate): $2.163 trillion (-0.3% vs. June 2024; +6.7% vs. July 2023).
- Productivity (2024Q2, Nonfarm Business Labor Productivity, seasonally adjusted annualized rate): +2.5% vs. 2024Q1; +2.7% vs. 2023Q2.
- Agricultural Prices (July 2024, Prices Received by Farmers, not seasonally adjusted): -2.7% vs. June 2024; -1.2% vs. July 2023).
- Beige Book
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What We Learned About the U.S. Economy Last Week 