Job creation has been sluggish in recent months. Here are the five things we learned from U.S. economic data released during the week ending August 1.
Job creation in late spring and early summer has been weak. Nonfarm payrolls grew by a seasonally adjusted 73,000 following lackluster gains of 19,000 and 14,000 in May and June, respectively. The data for the two previous months reflect a sharp downward revision by the Bureau of Labor Statistics of a combined 258,000. Private sector employers added 83,000 workers, driven by the service sector. Health care/social assistance (+73,300) and retail (+15,700) reported the biggest payroll gains. The average weekly earnings of $1,249.89 represented a 4.2 percent year-to-year increase.
A separate household survey has the unemployment rate growing by 1/10th of a percentage point to 4.2 percent. The civilian labor force contracted by 38,000, with the labor force participation rate slipping by 1/10th of a percentage point to 62.2 percent. The 25-54 participation rate decreased by 1/10th of a percentage point to 83.5 (the measure has fallen by a half percentage point over the past year). The median length of unemployment was 10.2 weeks, up 1/10th of a week from June. The number of part-time workers seeking full-time work grew by 260,000 to 4.684 million. The broadest measure of labor underutilization (the “U-6” series) grew by 2/10ths of a percentage point to 7.9 percent.
Consumer spending and inflation edged up in June. The Bureau of Economic Analysis reports real Personal Consumption Expenditures (PCE) inched up a seasonally adjusted 0.1 percent after a 0.2 percent decline in May. Spending on goods and services each increased 0.1 percent, with the former reflecting a half-point drop for durable goods and a 0.5 percent gain for nondurables. Without adjustments for inflation, nominal PCE grew 0.3 percent, funded by similar 0.3 percent gains for nominal personal and disposable income. With price adjustments, real disposable income was unchanged in June. The savings rate held steady at +4.5 percent. Over the past year, real PCE has risen 2.9 percent as real disposable personal income grew 1.7 percent. The same report has the PCE price index and the core PCE price index (net of energy and food) jumping 0.3 percent. Over the past year, the two closely watched inflation measures have increased 2.6 percent and 2.8 percent, respectively.
The Federal Reserve kept short-term rates steady, but there was dissent. The statement released following this past week’s Federal Open Market Committee (FOMC) meeting noted that economic growth had “moderated,” there have been “swings in net exports,” inflation was “somewhat elevated,” and unemployment remained “low.” Further, the statement noted that economic uncertainty was “elevated.” The statement included the Fed’s mandate of two percent inflation and a commitment “to achieve maximum employment.” As a result, the committee voted to keep the fed funds target rate at 4.25 – 4.50 percent and further reduce the central bank’s holdings of Treasury securities and agency mortgage-backed securities. The big news is that there were two dissenters—Bowman and Waller—who wanted a quarter-point cut in the fed funds target rate.
Sentiment brightened modestly in July. The Conference Board’s Consumer Confidence Index added 2.0 points to a seasonally adjusted 97.2 (1985=100). A year earlier, the measure was at 101.9. The current conditions index lost 1.5 points to 131.5, while the expectations measure jumped by 4.5 points to 74.4. The expectations index has been below 80, which “typically signals a recession ahead,” for six straight months. The press release noted that sentiment “has stabilized since May.” 20.1 percent of survey respondents said that business conditions were “good,” while 14.3 percent said that they were “bad.”
The University of Michigan’s Index of Consumer Sentiment grew by a point to 61.7 (1966Q1=100). The index was down 7.1 percent from a year earlier. The current conditions index increased by 3.2 points to 68.0 (+8.5 percent versus July 2024), while the expectations measure slipped 4/10ths of a point to 57.7 (-16.1 percent versus July 2024). One-year inflation expectations were at +4.5 percent, down a half point from June, with long-run anticipated inflation at +3.4 percent. The press release noted that “[c]onsumers are hardly optimistic about the trajectory of the economy.”
Manufacturing activity slowed in July. The Manufacturing PMI declined by a whole point to -48.0. The Institute for Supply Management measure has been below 50.0—the threshold between an expanding and declining manufacturing sector—for five straight months and 33 over the past 35 months. Indices for new orders (47.1) and production (51.4) improved, while those for employment (43.4) and inventories (48.9) dropped. Seven manufacturing industries expanded during July, led by apparel, plastic/rubber products, and nonmetallic mineral products. The press release noted that none of the six largest manufacturing industries expanded during the month.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending July 26, 2025, First-Time Claims, seasonally adjusted): 218,000, +1,000 vs. the previous week, -30,000 vs. the same week a year earlier). 4-week moving average: 221,000 (-6.6% vs. the same week a year earlier).
- Job Openings and Labor Turnover (June 2025, Job Openings, seasonally adjusted): 7.737 million (-275,000 vs. May 2025; +0.3% vs. June 2024).
- Construction Spending (June 2025, Value of Construction Put in Place, seasonally adjusted annualized rate): $2.136 trillion (-0.4% vs. May 2025; -2.9% vs. June 2024).
- Pending Home Sales (June 2025, Index (2001=100), seasonally adjusted): 72.0 (-0.8% vs. May 2025; -2.8% vs. June 2024).
- FHFA House Price (May 2025, Purchase-Only Index, seasonally adjusted): -0.2% vs. April 2025; +2.8% vs. May 2024.
- S&P Case-Shiller Home Price (May 2025, National Index, seasonally adjusted): -0.3% vs. April 2025; +2.3% vs. May 2024.
- Agricultural Prices (June 2025, Prices Received by Farmers, seasonally adjusted): -1.2% vs. May 2025; +9.2% vs. June 2024.
The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.
What We Learned About the U.S. Economy Last Week 