August jobs report; July’s trade deficit, construction spending, factory inventories, and JOLTS, et al

August jobs report; July’s trade deficit, construction spending, factory inventories, and JOLTS, et al

Major reports released last week included the Employment Situation Summary for August and the Job Openings and Labor Turnover Survey (JOLTS) report for July, both from the Bureau of Labor Statistics, and three July reports that provide us with preliminary input data to 3rd quarter GDP, and also suggest revisions to 2nd quarter GDP: the July report on our International Trade from the Bureau of Economic Analysis, and the July report on Construction Spending (pdf), and the Full Report on Manufacturers’ Shipments, Inventories and Orders for July, both from the Census Bureau…

The week’s major privately issued reports included the ADP Employment Report for August, the light vehicle sales report for August from Omida, aka Wards Automotive, which estimated that vehicles sold at a 16.07 million annual rate in August, down from the 16.41 million annual sales rate reported in July, but up from the 15.13 million annual rate reported for August a year ago, and both of the widely followed purchasing manager’s surveys from the Institute for Supply Management (ISM): the August Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) rose to 48.7% in August, up from 48.0% in July, which means that a smaller plurality of manufacturing industry purchasing managers reported deteriorating conditions in various facets of their business in August than in July, and the August Services Report On Business; which saw their Services PMI rise to 52.0% in August, up from 50.1% in July, indicating a larger plurality of service industry purchasing managers reported improvement in various facets of their business in August than in July, when barely half of them saw improvement…

Employers Added Just 22,000 Jobs in August; U-6 Unemployment Rate Highest in Nearly 4 Years

The Employment Situation Summary for August indicated a payroll jobs increase that was below expectations and the lowest initial report, before revisions, since the 2020 pandemic lockdowns, an unemployment rate that was 0.1% higher, and an increase in the U-6 unemployment rate that includes those “employed part time for economic reasons” to the highest rate since October 2021 ….estimates extrapolated from the establishment survey data indicated that employers added a seasonally adjusted 22,000 jobs in August, after the payroll job increase for July was revised up from 73,000 to 79,000, while the payroll jobs change for June was revised from an increase of 14,000 jobs to a decrease of 13,000 jobs, revisions which combined means that this report indicates an increase of just 1,000 more jobs than were reported last month, following the anemic average 82,300 per month over the first seven months of 2025 …the unadjusted data shows that there were actually 200,000 more payroll jobs in August, as downward adjustments to sectors that normally see an increase in August, such as education, were more than offset by upward adjustments to sectors that normally see a decrease, such as retail sales and leisure and hospitality….

Seasonally adjusted job increases were concentrated in health care and social assistance, in leisure and hospitality, in general merchandise retail, and in local education, while the private goods producing sector and the government sector both saw jobs decrease…since the BLS summary of the job gains by sector is clear and usually more detailed than our usual synopsis, we’ll just quote from that summary here:

• Total nonfarm payroll employment changed little in August (+22,000) and has shown little change since April. Over the month, a job gain in health care was partially offset by losses in federal government and in mining, quarrying, and oil and gas extraction. (See table B-1.)
• In August, health care added 31,000 jobs, below the average monthly gain of 42,000 over the prior 12 months. Employment continued to trend up over the month in ambulatory health care services (+13,000), nursing and residential care facilities (+9,000), and hospitals (+9,000).
• Employment in social assistance continued to trend up in August (+16,000), reflecting continued job growth in individual and family services (+16,000).
• Federal government employment continued to decline in August (-15,000) and is down by 97,000 since reaching a peak in January. (Employees on paid leave or receiving ongoing severance pay are counted as employed in the establishment survey.)
• In August, employment in mining, quarrying, and oil and gas extraction declined by 6,000, after changing little over the prior 12 months.
• Wholesale trade employment continued to trend down in August (-12,000) and has fallen by 32,000 since May.
• Manufacturing employment changed little in August (-12,000) but is down by 78,000 over the year. Employment in transportation equipment manufacturing declined by 15,000 over the month, in part due to strike activity.
• Employment showed little change over the month in other major industries, including construction, retail trade, transportation and warehousing, information, financial activities, professional and business services, leisure and hospitality, and other services.

The establishment survey also showed that average hourly pay for all employees rose by 10 cents an hour to $36.44 an hour, after it had increased by a revised 11 cents an hour in July; at the same time, the average hourly earnings of production and non-supervisory employees increased by 12 cents to $31.46 an hour….employers also reported that the average workweek for all private payroll employees was unchanged at 34.2 hours, while average week​ly hours for production and non-supervisory personnel w​e​re unchanged at 33.7 hours…meanwhile, the manufacturing workweek decreased by 0.1 hour to 40.0 hours, while average factory overtime was unchanged at 2.9 hours…

At the same time, the seasonally adjusted extrapolation from the August household survey indicated that the number of those who would self-report being employed rose by an estimated 288,000 to 163,394,000, while the similarly estimated number of those who would be counted as unemployed rose by 148,000 to 7,384,000; which together meant that August saw a net rounded increase of 436,000 to 170,778,000 in the total labor force…since the working age population had grown by 216,000 over the same period, that meant the number of employment aged individuals who were not in the labor force fell by a rounded 220,000 to 103,223,000….the increase in the total labor force was enough to raise the labor force participation rate, from 62.2% in July to 62.3% in August, even as it was still down from 62.7% in August of last year….however, the increase in number employed vis-a-vis the population was not great enough to increase the employment to population ratio, which we could think of as an employment rate, as it remained at 59.6%, ​and was down from 60.0% a year ago…however, the increase in the number counted as unemployed was enough to raise the unemployment rate as a percentage of the labor force from 4.2% to 4.3%….meanwhile, the number who reported they were involuntarily working part time rose by 65,000 to 4,749,000 in August, which meant that the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, rose from 7.9% in July to 8.1% in August, the highest since the pandemic impacted month of October 2021….

Like most reports from the Bureau of Labor Statistics, the employment situation press release itself is easy to read and understand, so you can get more details on these two reports from there…note that almost every paragraph in that release points to one or more of the tables that are linked to on the bottom of the release, and those tables are also on a separate html page here that you can open it alongside the press release to avoid the need to scroll up and down the page to access the tables..

Job Openings Fell in July, Hiring Rose; Job Quitting and Layoffs Little Changed

The Job Openings and Labor Turnover Survey (JOLTS) report for July from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 176,000, from 7,357,000 in June to 7,181,000 in July, after June’s job openings were revised 80,000 lower, from the 7,437,000 reported a month ago to 7,357,000 with this report…July’s jobs openings were also 4.3% lower than the 7,504,000 job openings reported for July a year ago, as the job opening ratio expressed as a percentage of the employed fell from 4.4% in June to 4.3% in July, and was down from 4.5% in July a year ago….while there was a 181,000 job opening decrease to 1,254,000 job openings in health care and social assistance, the 62,000 job opening decrease to 108,000 job openings in the arts, entertainment, and recreation sector appears to be the largest percentage decrease for this month, while an increase from 145,000 to 199,000 job openings in wholesale trade looks to be the largest percentage increase… (see table 1 for more details)…like most BLS releases, the press release for report is easy to understand and also refers us to the associated table for the data cited, which are linked at the end of the release…

The JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and ‘other separations’, which includes retirements and deaths….in July, seasonally adjusted new hires totaled 5,308,000, up by 41,000 from the revised 5,267,000 who were hired or rehired in June, as the hiring rate as a percentage of all employed remained at 3.3% in July, while it was still down from the 3.4% hiring rate of July a year earlier (details of hiring by sector since March are in table 2)….meanwhile, total separations fell by 52,000, from 5,341,000 in June to 5,289,000 in July, while the separations rate as a percentage of the employed was also unchanged at 3.3% in July, while it was also down from the 3.4% separations rate in July a year ago (see table 3)…subtracting the 5,289,000 total separations from the total hires of 5,308,000 would imply an increase of 19,000 jobs in July, somewhat less than the revised payroll job increase of 79,000 for July reported by the August establishment survey later in the week, but still with the expected +/-110,000 margin of error in these incomplete employment extrapolations…

Breaking down the seasonally adjusted job separations, the BLS finds that 3,208,000 of us voluntarily quit our jobs in July, down by 1,000 from the revised 3,209,000 who quit their jobs in June, while the quits rate, widely watched as an indicator of worker confidence, was unchanged at 2.0% of total employment, while it was down from the 2.1% quits rate in July a year earlier (see details in table 4)….in addition to those who quit, another 1,808,000 were either laid off, fired or otherwise discharged in July, up by 12,000 from the revised 1,796,000 who were discharged in June, as the discharges rate remained at 1.1% of all those who were employed during the month, which was the same as the discharges rate of a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 272,000 in July, down from the revised 335,000 in June, for an ‘other separations rate’ of 0.2%, the same as in June and as in July of last year….both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release…

US Trade Deficit Rose 35.2% in July on Higher Imports of Precious Metals and Capital Goods

Our trade deficit increased by 35.2% in July, after decreasing by a revised 16.9% in June and increasing by 18.9% in May, as both the value our exports and our imports increased, but the value of our imports rose by twenty-five times as much……the Commerce Department's report on our international trade in goods and services for July indicated that our seasonally adjusted goods and services trade deficit increased by $​1​9.2 billion to a rounded $78.​3 billion in July, up from a revised June deficit of $59.1 billion, which had previously been reported at $60.2 billion…trade figures going back to January were revised with this report, which on net left the 2nd quarter trade deficit about $1.4 billion lower than was previously reported, suggesting a upward revision to 2nd quarter GDP, the magnitude of which depends on the 1st quarter revisions, which will be included in the annual revision to GDP at the end of September…

After rounding, the value of our exports rose by $0.8 billion, or 0.3 percent, to $280.5 billion in July, on a $0.2 billion increase to $179.4 billion in our exports of goods, and a $0.6 billion increase to $101.0 billion in our exports of services, while our imports rose by $20.0 billion, or 5.9 percent, to $358.8 billion, on a $18.4 billion increase to $283.3 billion in our imports of goods, and a $1.7 billion increase to $75.5 billion in our imports of services…export prices were on average 0.1% higher in July, so ​part of this month’s increase in exports was due to higher prices and real exports were likely only 0.2% higher, while import prices were 0.4% higher, meaning that​ the increase in our real imports w​a​s smaller than their nominal value by that percentage, and likely rose around 3.5%..

The $0.2 billion increase in July’s exports of goods was due to greater exports of capital goods and automotive products, which were mostly offset by lower exports of industrial supplies and materials and other goods…. referencing the Full Release and Tables for July(pdf), in Exhibit 7 we find that our exports of capital goods rose by $552 million to $59,948 million as an $859 million increase in our exports of computer accessories, a $698 million increase in our exports of civilian aircraft, and a $301 million increase in our exports of computers were offset by a $1,545 million decrease in our exports of excavating machinery and a $505 million decrease in our exports of semiconductors, while our exports of automotive vehicles, parts, and engines rose by $340 million to $13,062 million on a $435 million increase in our exports of trucks, buses, and special purpose vehicles​, and our exports of foods, feeds, and beverages rose by $76 million to $13,779 million on higher exports of soybean​s and wheat.…partly offsetting the increases in those end-use categories, our exports of industrial supplies and materials fell by $238 million to $60,157 million as a $2,528 million decrease in our exports of finished metal shapes and a $522 million decrease in our exports of petroleum products other than fuel oil were mostly offset by a $2,906 million increase in our exports of nonmonetary gold and a $308 million increase in our exports of fertilizers, pesticides, and insecticides, ​while our exports of consumer goods fell by $207 million to $22,738 million on a $246 million decrease in our exports of pharmaceuticals, and our exports of other goods not categorized by end use fell by $499 million to $8,686 million…

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our imports and shows that higher imports of industrial supplies and materials, capital goods, and consumer goods were responsible for most of July’s increased imports, while they were slightly offset by lower imports of automotive products .…our imports of industrial supplies and materials rose by $12,522 million to $60,896 million as a $9,560 million increase in our imports of nonmonetary gold, a $695 million increase in our imports of other precious metals, a $541 million increase in our imports of copper, a $481 million increase in our imports of organic chemicals and a $359 million increase in our imports of fuel oil were partly offset by a $755 million decrease in our imports of petroleum products other than fuel oil, while our imports of capital goods rose by $4,703 million to $96,193 million as a $1,465 million increase in our imports of computers, a $922 million increase in our imports of telecommunications equipment, and a $621 million increase in our imports of industrial machinery not itemized separately were partly offset by a $817 million decrease in our imports of semiconductors...in addition, our imports of consumer goods rose by $1,271 million to $58,852 million as a $569 million increase in our imports of jewelry, a $349 million increase in our imports of toys, games, and sporting goods, a $334 million increase in our imports of household appliances, on a $316 million increase in our imports of furniture and related household goods, and a $301 million increase in our imports of televisions and video equipment were partly offset by a $1​,093 million decrease in our imports of pharmaceutical preparations and a $426 million decrease in our imports of cell phones and related household goods, our imports of foods, feeds, and beverages rose by $440 million to $18,503 million on higher imports of fruits, fruit juices, and vegetables, and our imports of other goods not categorized by end use rose by $759 million to $12,844 million…partly offsetting the increases in those end-use categories, our imports of automotive vehicles, parts and engines fell by $1,409 million to $33,923 million as a $957 million decrease in our imports of new and used passenger cars and an $821 million decrease in our imports of trucks, buses, and special purpose vehicles were partly offset by a $303 million increase in our imports of parts and accessories of vehicles other than engines, chassis, and tires…

The press release for this month’s report summarizes Exhibit 19 in the full release pdf for June, which gives us trade surplus and trade deficit details on our goods trade with selected countries:

The July figures show surpluses, in billions of dollars, with Netherlands ($4.8), South and Central America ($4.6), Hong Kong ($1.9), United Kingdom ($1.8), Belgium ($1.0), Brazil ($0.5), Saudi Arabia ($0.3), and Singapore ($0.3). Deficits were recorded, in billions of dollars, with Mexico ($16.6), Vietnam ($16.1), China ($14.7), Taiwan ($13.5), European Union ($8.6), Switzerland ($7.7), India ($5.6), Canada ($5.4), Germany ($5.4), South Korea ($5.0), Japan ($4.8), Malaysia ($2.7), Ireland ($2.6), Italy ($2.2), Israel ($0.7), Australia ($0.4), and France ($0.3).

• The deficit with Switzerland increased $7.6 billion to $7.7 billion in July. Exports decreased $1.2 billion to $2.9 billion and imports increased $6.5 billion to $10.6 billion.
• The deficit with China increased $5.3 billion to $14.7 billion in July. Exports decreased less than $0.1 billion to $10.0 billion and imports increased $5.3 billion to $24.7 billion.
• The deficit with Ireland decreased $2.7 billion to $2.6 billion in July. Exports increased $0.4 billion to $1.7 billion and imports decreased $2.4 billion to $4.3 billion.

To gauge the impact of July’s international trade in goods on 3rd quarter GDP growth figures, we use exhibit 10 in the pdf for this report, which gives us monthly goods trade figures by end use category and in total, already adjusted in chained 2017 dollars, the same inflation adjustment used by the BEA to compute trade figures for GDP, except they are not annualized here….from that table, we can compute that 2nd quarter real exports of goods averaged 150,330.3 million monthly in 2017 dollars, while July’s inflation adjusted exports came in at 146,170 million in that same 2017 dollar quantity index representation….figuring the annualized change between those two figures, we find that July's real exports of goods are running at a 10.6% annual rate below those of the 2nd quarter, or at a pace that would subtract about 0.74 percentage points from 3rd quarter’s GDP if it were continued through August and September…..in a similar manner, we find that our 2nd quarter real imports of goods averaged 237,774.3 million monthly in chained 2017 dollars, while the similarly inflation adjusted July goods imports were at 246,267 million…that would indicate that so far in the 3rd quarter, our real imports of goods have grown at a 15.07% annual rate from those of the 2nd quarter…since imports subtract from GDP because they represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, their increase at a 15.07% rate would subtract about 2.14 percentage points from 3rd quarter GDP….hence, if the July trade deficit is maintained at the same level throughout the 3rd quarter, our deteriorating balance of trade in goods over that of the 2nd quarter would subtract a net of about 2.88 percentage points from the growth rate of 3rd quarter GDP….

However, you’ll note that we have not even computed the impact of the usually less volatile change in services here, because the BEA does not provide inflation adjusted data on those, and we don’t have a straightforward way to adjust the various services for all their price changes, but that our exports in services grew $0.6 billion in July, whereas our imports in services grew $1.7 billion, which would suggest another hit to GDP on the services side of the trade ledger…

Construction Spending Fell 0.1% in July after May and June Spending was Revised 0.2% Higher

The Census Bureau report on construction spending for July (pdf) estimated that the month’s seasonally adjusted construction spending would work out to $2,139.1 billion annually if extrapolated over an entire year, which was 0.1 percent (±0.8 percent)* below the revised annualized estimate of $2,140.5 billion of construction spending in June​, and 2.8 percent (±1.5 percent) below the estimated annualized level of construction spending in July of last year….the June construction spending estimate was revised roughly 0.2% higher, from $2,136.2 billion to $2,140.5 billion, while the annual rate of construction spending for May was revised more than 0.2% higher, from $2,143.9 billion to $2,149.1 billion….on net, those revisions mean that construction during the 2nd quarter was about $9.5 billion greater, at an annual rate, than the figures used in last week’s GDP estimate, which would suggest ​there'd need to be an upward revision of about 0.18 percentage points to 2nd quarter GDP when the third estimate is released at the end of September, assuming the net impacts from the inflation adjustments on the revisions are similar to those we saw in the 2nd GDP estimate…

A further breakdown of the different subsets of construction spending is provided in a Census summary, which precedes the detailed spreadsheets:

• Private Construction: Spending on private construction was at a seasonally adjusted annual rate of $1,623.3 billion, 0.2 percent (±0.5 percent)* below the revised June estimate of $1,626.3 billion. Residential construction was at a seasonally adjusted annual rate of $886.5 billion in July, 0.1 percent (±1.3 percent)* above the revised June estimate of $885.9 billion. Nonresidential construction was at a seasonally adjusted annual rate of $736.7 billion in July, 0.5 percent (±0.5 percent)* below the revised June estimate of $740.4 billion.
• Public Construction: In July, the estimated seasonally adjusted annual rate of public construction spending was $515.8 billion, 0.3 percent (±1.6 percent)* above the revised June estimate of $514.3 billion. Educational construction was at a seasonally adjusted annual rate of $111.7 billion, 0.1 percent (±1.8 percent)* below the revised June estimate of $111.8 billion. Highway construction was at a seasonally adjusted annual rate of $142.8 billion, 0.1 percent (±4.8 percent)* below the revised June estimate of $142.9 billion

Construction spending inputs into 3 subcomponents of GDP; investment in private non-residential structures, investment in residential structures, and into government investment outlays, for both state and local and Federal governments…however, getting an accurate read on the impact of July spending reported in this release on 3rd quarter GDP is difficult because all figures given here are in nominal dollars and as you know, data used to compute the change in GDP must be adjusted for changes in price…the National Income and Product Accounts Handbook, Chapter 6 (pdf), lists a multitude of privately published deflators that are used by the BEA for each of the various components of non-residential investment, so in lieu of trying to adjust for all of those different price indices, we’ve opted to just use the producer price index for final demand construction as an inexact shortcut to make the price adjustment needed ​t​o make an approximate estimate…

That price index showed that aggregate construction costs were up 0.6% in July, after rising 0.1% in June, and after rising 0.2% from April to May…on that basis, we can estimate that July construction costs were roughly 0.9% more than those of April, roughly 0.7% more than those of May, and obviously 0.6% more than those of June…we then use those percentages to inflate the lower priced spending figures for each of those months, which is arithmetically the same as deflating higher priced July construction spending, for comparison purposes…annualized construction spending in millions of dollars for the months of the second quarter is given as 2,140,546 for June, 2,149,124 for May, and 2,153,440 for April, while it was at 2,139,110 million in July …thus to compare July’s inflation adjusted construction spending to that of the second quarter, our arithmetic formula becomes: 2,139,110 / (((2,140,546 * 1.006) + (2,149,124 * 1.007) + (2,153,440 * 1.009) / 3) = 0..988745, meaning real construction spending in July was down 1.13% vis a vis the 2nd quarter, or down at a 4.4% annual rate…to figure the effect of that change on GDP, we take the difference between the inflation adjusted second quarter spending average and that of July, and then take that result as a fraction of 2nd quarter GDP, and estimate that aggregate July construction spending is falling at a rate that would subtract approximately 0.34 percentage points from 3rd quarter GDP, should we see no improvement from July’s adjusted figures in August or September…

Factory Shipments Rose 0.9% in July, Factory Inventories Rose 0.3%

The July Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods fell by d $7.8 billion or 1.3 percent to $603.6 billion in July, following a decrease of 4.8% to $611.5 billion in June, which was revised from the 4.8% decrease to $611.7 billion reported last month….however, since the Census Bureau does not even collect data on new orders for non durable goods for this widely watched “factory orders report”, both the “new orders” and “unfilled orders” sections of this report are really only accurate as a revised update to the July advance report on durable goods we reported on last week…on those revisions, the Census Bureau’s own summary, which precedes their detailed spreadsheet of the metrics included in this report, is quite complete, so we’ll just quote directly from that here:

• Summary: New orders for manufactured goods in July, down three of the last four months, decreased $7.8 billion or 1.3 percent to $603.6 billion, the U.S. Census Bureau reported today. This followed a 4.8 percent June decrease. Shipments, up three consecutive months, increased $5.3 billion or 0.9 percent to $608.3 billion. This followed a 0.6 percent June increase. Unfilled orders, up twelve of the last thirteen months, increased $0.4 billion or virtually unchanged to $1,469.6 billion. This followed a 0.9 percent June increase. The unfilled orders-to-shipments ratio was 6.87, down from 7.01 in June. Inventories, up nine of the last ten months, increased $2.6 billion or 0.3 percent to $948.8 billion. This followed a 0.2 percent June increase. The inventories-to-shipments ratio was 1.56, down from 1.57 in June.
• New Orders for manufactured durable goods in July, down three of the last four months, decreased $8.6 billion or 2.8 percent to $303.2 billion, unchanged from the previously published decrease. This followed a 9.4 percent June decrease. Transportation equipment, also down three of the last four months, drove the decrease, $10.7 billion or 9.5 percent to $102.0 billion. New orders for manufactured nondurable goods increased $0.8 billion or 0.3 percent to $300.5 billion.
• Shipments of manufactured durable goods in July, up eight consecutive months, increased $4.5 billion or 1.5 percent to $307.8 billion, up from the previously published 1.4 percent increase. This followed a 0.7 percent June increase. Transportation equipment, up seven of the last eight months, led the increase, $2.5 billion or 2.5 percent to $101.8 billion. Shipments of manufactured nondurable goods, up three consecutive months, increased $0.8 billion or 0.3 percent to $300.5 billion. This followed a 0.4 percent June increase. Petroleum and coal products, up two consecutive months, led the increase, $0.2 billion or 0.4 percent to $55.3 billion.
• Unfilled Orders for manufactured durable goods in July, up twelve of the last thirteen months, increased $0.4 billion or virtually unchanged to $1,469.6 billion, unchanged from the previously published increase. This followed a 0.9 percent June increase. Electrical equipment, appliances and components, up three consecutive months, led the increase, $0.2 billion or 0.3 percent to $52.1 billion.
• Inventories of manufactured durable goods in July, up ten consecutive months, increased $2.0 billion or 0.3 percent to $591.2 billion, unchanged from the previously published increase. This followed a 0.2 percent June increase. Transportation equipment, up three of the last four months, led the increase, $0.6 billion or 0.3 percent to $189.0 billion. Inventories of manufactured nondurable goods, up two consecutive months, increased $0.6 billion or 0.2 percent to $357.7 billion. This followed a 0.2 percent June increase. Beverage and tobacco products, up nine of the last ten months, led the increase, $0.2 billion or 0.6 percent to $34.5 billion. By stage of fabrication, July materials and supplies increased 0.3 percent in durable goods and 0.9 percent in nondurable goods. Work in process was virtually unchanged in durable goods and increased 1.2 percent in nondurable goods. Finished goods increased 0.8 percent in durable goods and decreased 0.8 percent in nondurable goods.

To estimate the effect of those July factory inventories on 3rd quarter GDP, they must first be adjusted for changes in price with appropriate components of the producer price index…by stage of fabrication, the value of finished goods inventories were virtually unchanged at $332,436 million; the value of work in process inventories rose 0.3% to $262,946 million, and materials and supplies inventories were valued 0.5% higher at $353,464 million.…meanwhile, the July producer price index reported that prices for finished goods were on average 0.7% higher, that prices for intermediate processed goods were on average 0.8% higher, while prices for unprocessed goods were 1.8% higher….assuming similar valuations for like types of inventories, those price changes would suggest that July’s real finished goods inventories were about 0.7% lower, that real inventories of intermediate processed goods were about 0.5% lower, and real raw material inventory inventories were about 1.3% lower…however, since real NIPA factory inventories down sharply in the 2nd quarter, accounting for over 80% the quarter’s record inventory decrease, that this report appears to indicate just a modest real decrease in aggregate July factory inventories would therefore mean that the difference between the 2nd quarter decrease and the July decrease would be added to the 3rd quarter’s real growth in GDP…

 

 

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are chosen from the aforementioned GGO posts, contact me…)