Not So Grand: September 1 – 5

Hiring wilted in the summer heat. Here are the five things we learned from U.S. economic data released during the week ending September 5.

The labor market slowdown continued in August. Nonfarm payrolls increased by a seasonally adjusted 22,000 during the month, which is below July’s also modest 79,000 gain but still better than June’s 13,000 contraction. The Bureau of Labor Statistics had modestly revised the June (down 27,000) and July (up 6,000) figures. Private sector employers added an anemic 38,000 workers to their payrolls (July: +77,000). Service sector payrolls grew by 63,000, mostly in health/social assistance (+46,800) and leisure/hospitality (+28,000). Government payrolls shrank by 16,000. Since the start of 2025, manufacturing payrolls have declined by 78,000. Average weekly earnings of $1,249.33 reflected a 3.4 percent increase over the past year.

Based on a separate survey of households, the unemployment rate inched up 1/10^th of a percentage point to 4.3 percent, its highest in four years but still low by historical standards. 436,000 people entered the labor force in August, leading to a 1/10^th of a percentage point gain in the labor force participation rate (62.3 percent). The 25 to 54 labor force participation rate rose by 3/10^ths of a percentage point to 83.7 percent. The typical length of unemployment declined by 4/10^ths of a week to 9.8 weeks. The number of part-time workers “for economic reasons” increased by 65,000 to 4.749 million. The broadest measure of labor underutilization (the U-6 series) added 2/10^ths of a percentage point to 8.1 percent.

Manufacturing activity slowed again in August. The Manufacturing PMI increased by 1.9 points to 48.7. Despite this rise, it marked the sixth consecutive month (and 32^nd in 34 months) that the Institute for Supply Management (ISM) index remained below 50.0, indicating a contracting manufacturing sector. While measures for new orders, employment, and inventories improved in August, the production index declined. Only seven manufacturing industries reported growth during the month, led by textiles, apparel, and nonmetallic mineral products. Ten other industries declined, led by paper, wood, and plastic/rubber products. Supply chain professionals’ comments focused on uncertainty and tariffs. 

Meanwhile, service sector activity picked up in August. The ISM’s Services PMI rose by 1.9 points to 52.0. The Services PMI has stayed above 50.0 for three consecutive months. Indices for new orders, business activity/production, employment, and inventories all improved during the month, though the employment figure remained below 50.0. Twelve service sector industries expanded, led by information, wholesale trade, and arts, entertainment, and recreation. The press release noted “increasing citations of tariff impacts” in survey participant comments.

Factory orders slowed as aircraft bookings slumped. New orders for manufactured goods fell 1.3% to a seasonally adjusted $603.6 billion. The Census Bureau measure year-to-date total reached $4.231 trillion, up 3.5 percent compared to the same months in 2024. Transportation equipment orders dropped 9.5 percent, pulled down by a 32.7 percent decline in civilian aircraft orders. Excluding transportation, factory orders increased 0.6 percent for the month and have risen 0.7 percent year-to-date. Shipments rose 0.9 percent to $608.3 billion. Year-to-date shipments of $4.176 trillion were 1.2 percent higher than the same period last year. Unfilled orders remained steady at $1.470 trillion, while inventories grew 0.3 percent to $948.8 billion. 

The trade deficit increased in July as imports surged. Exports grew by 0.3 percent to a seasonally adjusted $280.5 billion, while imports jumped 5.9% to $358.8 billion. As a result, the trade deficit widened by 32.5 percent to -$78.3 billion. The Census Bureau and the Bureau of Economic Analysis estimate the year-to-date trade deficit at -$654.2 billion, which is 30.9 percent ahead of its year-ago pace. The goods deficit expanded by $18.2 billion to -$103.9 billion, while the services surplus decreased by $1.1 billion to +$25.6 billion. The former reflected higher imports of nonmonetary gold, capital goods, and consumer goods. The U.S. had its largest goods deficits with Mexico, Vietnam, China, and Taiwan. 

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

• Jobless Claims (Week ending August 30, 2025, First-Time Claims, seasonally adjusted): 237,000 (+8,000 vs. the previous week, +9,000 vs. the same week a year earlier). 4-week moving average: 231,000 (+0.4% vs. the same week a year earlier).
• Job Openings and Labor Turnover (July 2025, Job Openings, seasonally adjusted): 7.181 million (-176,000 vs. June 2025; -4.3% vs. July 2024).
• Vehicle Sales (August 2025, Automobile and Light Truck Sales, seasonally adjusted annualized rate): 16.069 million (-2.9% vs. July 2025; +6.2% vs. August 2024).
• Productivity (2025Q2-Revised, Nonfarm Business Labor Productivity, seasonally adjusted annualized rate): +3.3% vs. 2025Q1; +1.5% vs. 2024Q2.
• Construction Spending (July 2025, Value of Construction Put in Place, seasonally adjusted annualized rate): $2.139 trillion (-0.1% vs. June 2025; -2.8% vs. July 2024).
• Beige Book

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.