Wilting in the Heat: What We Learned During the Week of August 3 – 7

The economy has failed to create jobs this summer. Here are five things we learned from U.S. economic data released during the week ending August 8. 

Payrolls fell in July. Nonfarm payrolls contracted by a seasonally adjusted 23,000, following tepid gains of 63,000 and 20,000 in May and June. The latter two figures reflected a sharp 103,000 combined downward revision by the Bureau of Labor Statistics. Private-sector payrolls increased by 30,000, with the “largest” gains in health care/social assistance (+25,000) and construction (+22,000). Shedding workers were the government (-53,000), leisure/hospitality (-40,000), retail (-19,400), and financial activities (-14,000). Average weekly earnings of $1,290.37 were up 3.5 percent from a year earlier.

A separate household survey finds the unemployment rate down 0.1 percentage points to 4.1 percent. The reason: 264,000 people left the labor market, dropping the labor force participation rate to 61.4 percent (its lowest level since 2021). The 25-54 labor force participation rate edged up 1/10^th of a percentage point to 83.2 percent. The median duration of unemployment fell by half a week to 10.5 weeks, while the count of part-time workers “for economic reasons” rose by 123,000 to 4.804 million. The broadest measure of labor underutilization (the U-6 series) held steady at 7.9 percent. 

Hiring and separations grew in July as jobs remained unfilled. Nonfarm private employers sought to fill a seasonally adjusted 7.359 million positions, down 178,000 for the month but up 2.2 percent from a year earlier. The Bureau of Labor Statistics report notes that private-sector job openings declined by 187,000 during the month to 6.536 million. Sectors with at least a million unfilled jobs were trade/transportation/utilities (1.330 million), professional/business services (1.304 million), and health care/social assistance (1.357 million). Employers hired 5.252 million workers, an increase of 96,000 for the month and 0.4 percent from a year earlier. Top hirers were trade/transportation/utilities (1.118 million) and professional/business services (1.085 million). 5.351 million workers separated from their jobs, up 91,000 for the month but down 1.5 percent from a year earlier. This included 3.232 million workers quitting their jobs (+79,000 for the month) and 1.766 million layoffs (+5,000 for the month).

Factory orders slipped in June. The Census Bureau reports that new orders for manufactured goods declined 0.3 percent to a seasonally adjusted $656.5 billion, following a 1.1 percent drop in May. Year-to-date factory orders of $3.855 trillion were up 5.8 percent from the comparable 2025 months. Durable goods orders expanded 0.5 percent (transportation goods: -0.1 percent), while nondurable goods slumped 1.2 percent. Shipments decreased 0.2 percent to $652.1 billion in June, after having grown 1.6 percent in the prior month. Year-to-date shipments of $3.814 trillion were 6.5 percent ahead of the comparable 2025 pace. Unfilled orders grew for the 23^rd time over the past 24 months, swelling 0.6 percent to $1.591 trillion, while inventories increased 0.1 percent to $962.9 billion.

Manufacturing business activity accelerated in July. The Manufacturing PMI rose 2.3 points to 55.6. The Institute for Supply Management measure has remained above 50.0 (therefore indicating expansion) for seven straight months and reached its highest level in more than four years. Measures for new orders (56.7), production (58.5), and employment (52.8) rose. The inventories index (51.2) declined slightly. Fifteen manufacturing industries grew in July, led by printing, apparel, and electrical equipment. The only manufacturing industry reporting a contraction was chemical products. 

The service sector remained robust in July. The ISM’s Services PMI edged up 0.1 points to 54.1. The Services PMI has been above the expansion/contraction threshold for 25 consecutive months. Indices for business activity/production (59.1), new orders (57.2), and inventories (51.4) improved, while the employment index (47.4) declined. Thirteen service sector industries expanded, led by retail, transportation/warehousing, and wholesale trade. Four service sector industries reported slowing activity, including agriculture. The press release characterizes the service sector as “resilient.”

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

• Jobless Claims (Week ending August 1, 2026, First-Time Claims, seasonally adjusted): 199,000 (+1,000 vs. the previous week, -27,000 vs. the same week a year earlier). 4-week moving average: 198,750 (-10.1% vs. the same week a year earlier).
• International Trade (June 2026, Goods and Trade Deficit, seasonally adjusted); -$73.3 billion (-5.6% vs. May 2026; +24.8% vs. June 2025). YTD deficit: -$371.2 billion (-33.8% vs. YTD 2025).
• Construction Spending (June 2026, Value of Construction Put in Place, seasonally adjusted annualized rate): $2.167 trillion (-0.1% vs. May 2026; -3.2% vs. June 2025).
• Productivity (2026Q2-Preliminary, Nonfarm Business Labor Productivity, seasonally adjusted annualized rate): +1.4% vs. 2026Q1; +2.2% vs. 2025Q2).
• Vehicle Sales (July 2026, Auto and Light Truck Sales, seasonally adjusted annualized rate): 16.326 million (-1.4% vs. June 2026; -1.5% vs. July 2025).
• Consumer Credit (June 2026, Outstanding Consumer Credit Balances (non-real estate), seasonally adjusted): $5.167 trillion (+$14.2 billion vs. May 2026; +2.4% vs. June 2025).
• Senior Loan Officer Opinion Survey

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