July’s jobs report; June’s trade deficit, construction spending, factory inventories, wholesale trade, and JOLTS

Major economic reports released the past week included the Employment Situation Summary for July and the Job Openings and Labor Turnover Survey (JOLTS) for June, both from the Bureau of Labor Statistics, and four June reports that included metrics which were only estimated in last week’s release of 2nd quarter GDP: the Commerce Department’s report on our International Trade for June, the June report on Construction Spending (pdf), the Full Report on Manufacturers’ Shipments, Inventories and Orders for June, and the June report on Wholesale Trade, Sales and Inventories, all of which were from the Census Bureau…

Privately issued reports included the ADP Employment Report for July, wherein the national payroll processor reported a 44,000 increase in private jobs in July, the light vehicle sales report for July from Wards Automotive, which is the source data for the BEA report, and which reported that vehicles sold at a 16.3 million annual rate in July, down the 16.4 million annual rate in June, and down from the 16.41 annual sales rate of July of 2025, and both of the widely watched purchasing manager’s surveys from the Institute for Supply Management (ISM): the July Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) rose to 55.6% in July, up from 53.3% in June, and the highest reading since May 2022, which means that a larger plurality of manufacturing industry purchasing managers reported improving conditions in various facets of their business in July than in any month over the past four years, while the July 2024 Services Report On Business reported their Services PMI inched up to 54.1%, up from 54.0% in June, indicating that a modest plurality of service industry purchasing managers continued to report increases in various business metrics in July, at a rate similar to that in June..

Seasonally Adjusted Jobs Fell 23,000 in July, Unemployment Rate Fell to 4.1%

The Employment Situation Summary for July from the Bureau of Labor Statistics reported the first payroll jobs loss since February, major downward revisions to the job increases on May and June, and that the employment metrics from the household survey deteriorated at the same time, as fewer people sought work…seasonally adjusted estimates extrapolated from the establishment survey data projected that employers cut 23,000 jobs in July, after the payroll job increase for May was revised down by 66,000, from 129,000 jobs to 63,000 jobs, and the June jobs increase was revised down by 37,000, from 57,000 to 20,000 jobs….with those revisions, that means that this report indicates there were 126,000 fewer jobs in July than was reported last month, and also means that increases in seasonally adjusted non-farm payrolls have averaged 60.900 per month over the first seven months of 2025, compared to the average job increase of 85,300 per month over the first seven months of 2025, the average job increase of 202,400 per month over the first seven months of 2024, the average job increase of 257,700 per month over the first seven months of 2023, and the average 417,700 per month increase over the first seven months of 2022…..the unadjusted data shows that there were actually 1,099,000 fewer payroll jobs extant in July than in June, as the large seasonal job cutbacks associated with the end of the school year were normalized by the seasonal adjustments, but still left local government education jobs showing a 49,600 job seasonal adjusted decrease…

Outside of that and a 19,400 job loss in retail sales, seasonally adjusted job increases were largely in the goods producing sector, while the few job gains in the service sector were widely scattered..…since the BLS summary of the job gains by sector is clear and usually as detailed than our usual synopsis, we’ll just quote from that summary here:

• Total nonfarm payroll Total nonfarm payroll employment changed little in July (-23,000), following an average monthly gain of 34,000 over the prior 12 months. In July, employment declined in local government education and retail trade. Employment continued to trend up in health care. (See table B-1.)
• Employment in local government education declined by 50,000 in July, after showing little net change over the prior 12 months.
• Retail trade lost 19,000 jobs in July. Employment declined in warehouse clubs, supercenters, and other general merchandise retailers (-21,000) and in gasoline stations and fuel dealers (-5,000). Sporting goods, hobby, musical instrument, book, and miscellaneous retailers added 10,000 jobs. Retail trade employment had shown little net change over the prior 12 months.
• Employment in financial activities continued to trend down in July (-14,000), reflecting losses in credit intermediation and related activities (-9,000) and insurance carriers and related activities (-7,000). Financial activities employment is down by 121,000 since a recent peak in May 2025.
• In July, employment in health care continued its upward trend (+22,000) but at a slower pace than the average monthly gain over the prior 12 months (+36,000). Employment in ambulatory health care services continued to trend up over the month (+18,000).
• Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; transportation and warehousing; information; professional and business services; social assistance; leisure and hospitality; and other services.

The establishment survey also showed that average hourly pay for all employees rose by 2 cents an hour to $37.62 an hour in July, after it had increased by a revised 9 cents an hour in June; at the same time, the average hourly earnings of production and non-supervisory employees increased by 4 cents to $32.40 an hour…employers also reported that the average workweek for all private payroll employees was unchanged at 34.3 hours, and that hours for production and non-supervisory personnel was unchanged at 33.8 hours ….at the same time, the average manufacturing workweek was also unchanged at 40.4 hours, while average factory overtime was down by 0.1 hour to 3.1 hours..

Meanwhile, the seasonally adjusted extrapolation from the July household survey estimated that the number of those employed fell by 87,000 to 162,177,000, while the similarly estimated number of those counted as unemployed fell by 178,000 to 6,916,000, which thus meant that July saw a rounded decrease of 264,000 in the total labor force…since the working age population had grown by 116,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by 381,000 to a record 106,189,000….meanwhile, the 264,000 decrease of those in the labor force was enough to lower the labor force participation rate, from 61.5% in June to 61.4% in July, which was also down from 62.2% in July of 2025 and the lowest since February 2021….at the same time, the decrease in number employed vis-a-vis the larger increase in the population was enough to lower the employment to population ratio, which we could think of as an employment rate, by 0.1% to 58.9%, its lowest since September 2021….

moreover, even with the decrease in the total labor force, the drop in those unemployed was enough to lower the unemployment rate from 4.2% to 4.1%, it’s lowest since last June….at the same time,the number who reported they were involuntarily working part time rose by 123,000 to 4,804,000 in July, which was enough to leave the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, unchanged at 7.9% in July, also matching the lowest rate since last June ….

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 alongside the press release to avoid the need to scroll up and down the page..

Job Openings were Lower in June; Hiring and Job Quitting were Higher; Layoffs were Little Changed

The Job Openings and Labor Turnover Survey (JOLTS) report for June from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 178,000, from 77,537,000 in May to 7,359,000 in June, after May’s job openings were revised 57,000 lower, from 7,594,000 to 77,537,000 …however, June’s jobs openings were still 2.2% higher than the 7,204,000 job openings reported for June of a year ago, while the job opening ratio expressed as a percentage of the employed fell from 4.5% in May to 4.4% in June, but was up from the 4.3% rate of June a year ago…the greatest percentage drop in June job openings was in the wholesale trade sector, where openings fell by 74,000 to 165,000, while job openings with the federal government rose by 39,000 to 139,000 (see table 1 for details on other categories of job openings)…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 June, seasonally adjusted new hires totaled 5,348,000, up by 96,000 from the revised 5,252,000 who were hired or rehired in May, as the hiring rate as a percentage of all employed rose to 3.4% in June from 3.3% in May, which matched the 3.4% hiring rate in June a year earlier (details of hiring by industry since January are in table 2)….meanwhile, total separations increased by 91,000, from 5,260,000 in May to 5,351,000 in June, as the separations rate as a percentage of the employed rose from 3.3% in May to 3.4% in June, which was unchanged from the 3.4% separations rate of June a year ago (see table 3)…subtracting the 5,351,000 total separations from the total hires of 5,348,000 would imply a loss of 3,000 jobs in June, in contrast to the revised payroll job increase of 20,000 for June that was reported by the July establishment survey later in the week, but well with the expected +/-110,000 margin of error in these incomplete employment extrapolations…

Breaking down the seasonally adjusted job separations, the BLS finds that 3,232,000 of us voluntarily quit their jobs in June, up by 79,000 from the revised 3,153,000 who quit their jobs in May, while the ‘quits rate’, widely watched as an indicator of worker confidence, remained unchanged at 2.0% of total employment, while it was still down from the 2.1% quits rate of a year earlier (see details in table 4)….in addition to those who quit, 1,766,000 were either laid off, fired or otherwise discharged in June, up by 5,000 from the revised 1,761,000 who were discharged in May, as the discharges rate was unchanged at 1.1% of all those who were employed during the month, which was down from the discharges rate of 1.2% a year earlier (see table 5)…meanwhile, other separations, which includes retirements and deaths, were at 353,000 in June, up from 346,000 in May, for an ‘other separations rate’ of 0.2%, the same as in May and as in June 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 easily accessed using the links to tables at the bottom of the press release…

US Trade Deficit was 5.6% Lower in June on Lower Imports of Drugs and Computers

Our trade deficit decreased by 5.6% in June, after increasing by a revised 42.2% in May, as both the value our exports and our imports decreased, but the value of our imports fell by more than twice as much….the Commerce Department report on our international trade in goods and services for June indicated that our seasonally adjusted goods and services trade deficit fell by a rounded $4.4 billion to $73.3 billion in June, from a revised but barely changed May deficit of $77.6 billion.…the value of our June exports fell by a rounded $2.9 billion to $314.7 billion on a $4.0 billion decrease to $206.9 billion in our exports of goods, which was partly offset by a $1.1 billion increase to $107.8 billion in our exports of services, while the value of our imports fell by a rounded $7.3 billion to $388.0 billion on a $7.9 billion decrease to $309.0 billion in our imports of goods, which was partly offset by a $0.6 billion increase to $79.0 billion in our imports of services…export prices were on average 0.6% lower in June, which means that part of the decrease in the value of our exports was due to lower prices, and hence our real exports fell on the order of 0.3%, while import prices were 0.3% higher, which means the decrease in the value of our imports was 0.3% less than their real decrease, and that our real imports fell by about 2.1% ….

The news release for this month’s report gives us a brief synopsis of Exhibits 7 and 8 in the Full Release and Tables pdf for May, which details the major reasons for the decreases in our exports and our imports: 

Exports of goods on a Census basis decreased $3.8 billion.

• Industrial supplies and materials decreased $3.3 billion.
  • Crude oil decreased $5.7 billion.
  • Fuel oil decreased $1.6 billion.
  • Nonmonetary gold increased $3.4 billion.
• Other goods decreased $0.8 billion.
• Capital goods decreased $0.6 billion.
  • Computers decreased $1.1 billion.

Net balance of payments adjustments decreased $0.2 billion.

Imports of goods on a Census basis decreased $7.7 billion.

• Capital goods decreased $2.1 billion.
  • Computers decreased $3.0 billion.
  • Telecommunications equipment increased $1.1 billion.
• Consumer goods decreased $2.1 billion.
• Pharmaceutical preparations decreased $1.9 billion.

  Net balance of payments adjustments decreased $0.2 billion.

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

The June figures show surpluses, in billions of dollars, with Netherlands ($7.2), South and Central America ($5.6), Hong Kong ($3.2), Switzerland ($2.9), United Kingdom ($2.2), Singapore ($1.8), Saudi Arabia ($1.8), Brazil ($1.7), Australia ($1.3), and Belgium ($0.9). Deficits were recorded, in billions of dollars, with Vietnam ($21.6), Mexico ($20.3), China ($15.3), Taiwan ($14.9), European Union ($10.9), South Korea ($7.4), Canada ($7.2), Germany ($7.1), India ($4.5), Malaysia ($4.4), Japan ($3.3), Ireland ($2.7), Italy ($2.5), France ($1.5), and Israel ($1.2).

• The balance with Switzerland shifted from a deficit of $2.3 billion in May to a surplus of $2.9 billion in June. Exports increased $4.5 billion to $6.5 billion and imports decreased $0.7 billion to $3.5 billion.
• The deficit with Taiwan decreased $4.5 billion to $14.9 billion in June. Exports increased $0.1 billion to $4.6 billion and imports decreased $4.4 billion to $19.5 billion.
• The deficit with South Korea increased $3.0 billion to $7.4 billion in June. Exports decreased $1.4 billion to $6.9 billion and imports increased $1.6 billion to $14.3 billion.

In the advance report on 2nd quarter GDP released last week, our June goods trade was estimated based on the sketchy Advance Report on our International Trade in Goods from the Census Bureau, which was also released that week, coincident with the GDP release…that report estimated that our June goods trade deficit was at $101,461 million on a Census basis, down from the $105,892 million goods deficit then reported for May….Exhibit 5 in this report revises those figures and shows that our actual goods trade deficit in June was at $102,109 million on a balance of payments basis, and $101,407 million on a Census basis, and that the May goods deficit was revised to $105,327 million on a Census basis…together, those revisions from the previously published data mean that the 2nd quarter goods trade deficit in goods was roughly $619 million less than the estimates that were used in the GDP report, or about $2.48 billion less at an annual rate, before adjusting for price changes…that change would indicate an upward revision of roughly 0.04 percentage points to 2nd quarter GDP when the 2nd estimate is released at the end of August…

Construction Spending Fell 0.1% in June, and Sharp Downward Revisions Hit 2nd Quarter GDP

The Census Bureau report on construction spending for June (pdf) estimated that the month’s seasonally adjusted construction spending would work out to $2,166.5 billion annually if extrapolated over an entire year, which was 0.1 percent (±0.8 percent)* below the revised annualized estimate of $2,168.5 billion of construction spending for May, and 3.2 percent (±1.5 percent) below the estimated annualized level of construction spending in June of last year….the May annualized construction spending estimate was revised nearly 1.9% lower, from $2,210.2 billion to $2,168.5 billion, while the annual rate of construction spending for April was revised nearly 1.8% lower, from $2,207.1 billion to $2,168.2 billion…after those revisions, construction spending tor the first half of 2026 amounted to $1,046.9 billion, 3.5 percent (±1.2 percent) less than the $1,084.5 billion spent for construction during the first half of 2025..

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 $1,622.5 billion, 0.1 percent (±0.5 percent)* below the revised May estimate of $1,624.5 billion. Residential construction was at a seasonally adjusted annual rate of $877.1 billion in June, 0.3 percent (±1.3 percent)* below the revised May estimate of $879.9 billion. Nonresidential construction was at a seasonally adjusted annual rate of $745.3 billion in June, 0.1 percent (±0.5 percent)* above the revised May estimate of $744.6 billion.
• Public Construction In June, the estimated seasonally adjusted annual rate of public construction spending was $544.1 billion, virtually unchanged from (±1.6 percent)* the revised May estimate of $544.0 billion. Educational construction was at a seasonally adjusted annual rate of $113.1 billion, virtually unchanged from (±2.5 percent)* the revised May estimate of $113.0 billion. Highway construction was at a seasonally adjusted annual rate of $150.9 billion, 0.1 percent (±4.4 percent)* below the revised May estimate of $151.1 billion.

Construction spending for all three months of the second quarter was lower than what was reported by the BEA in the advance report for 2nd quarter GDP last week.…as we noted above, the annual rate of construction spending for April was revised $38.9 billion lower, and annualized construction spending for May was revised $41.7 billion lower….in reporting 2nd quarter GDP, the Excel file with key source data and assumptions accompanying the GDP report indicated on line 86 that they had estimated that the annualized value of June’s nonresidential construction would be $3.1 billion less than that of the previously reported May figure, that June’s annualized residential construction on line 109 would be $0.9 billion more than that of the previously reported May figure, and that the value of June’s public construction shown on line 200 would be $1.0 billion less than the previously published May figure…hence, the total of the annualized figures used by the BEA for total June construction in the 2nd quarter GDP report were $3.2 billion less than the previously published May figure…with June construction now reported to be down $2.0 billion from a May figure that was revised $41.7 billion lower, that means that the BEA had overestimated annualized June construction spending by $40.5 billion when reporting 2nd quarter GDP…thus, after averaging the revisions to construction spending for the three months of the 2nd quarter, we find the total revised annualized figure for 2nd quarter construction spending would thus be $40.4 billion less in current dollars than the current dollars figures used by the BEA when computing 2nd quarter GDP, implying we’ll see a downward revision of about 0.73 percentage points to the construction components of 2nd quarter GDP when the 2nd estimate is released on the 27th of August, give or take a bit, depending on the mix of inflation adjustments to the revised figures…

Factory Shipments Rose 0.5% in June, Factory Inventories were 0.2% Higher

The 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 $2.3 billion or 0.3 percent to $656.5 billion in June, following a decrease of 1.1% to $658.8 billion in May, which was revised from the 1.3% decrease to $657.4 billion reported for May 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 useful as a revised update to the 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 June, down two consecutive months, decreased $2.3 billion or 0.3 percent to $656.5 billion, the U.S. Census Bureau reported today. This followed a 1.1 percent May decrease. Shipments, down following six consecutive monthly increases, decreased $1.1 billion or 0.2 percent to $652.1 billion. This followed a 1.6 percent May increase. Unfilled orders, up twenty-three of the last twenty-four months, increased $9.6 billion or 0.6 percent to $1,590.6 billion. This followed a 0.7 percent May increase. The unfilled orders-to-shipments ratio was 6.86, down from 6.90 in May. Inventories, up nine consecutive months, increased $0.9 billion or 0.1 percent to $962.9 billion. This followed a 0.2 percent May increase. The inventories-to-shipments ratio was 1.48, up from 1.47 in May.
• New Orders  for manufactured durable goods in June, up three of the last four months, increased $1.6 billion or 0.5 percent to $335.4 billion, up from the previously published 0.3 percent increase. This followed a 4.0 percent May decrease. Computers and electronic products, up nine of the last ten months, led the increase, $1.0 billion or 3.2 percent to $31.1 billion. New orders for manufactured nondurable goods decreased $3.9 billion or 1.2 percent to $321.1 billion.
• Shipments of manufactured durable goods in June, up nine of the last ten months, increased $2.8 billion or 0.8 percent to $331.0 billion, up from the previously published 0.7 percent increase. This followed a 1.1 percent May increase. Computers and electronic products, up nine consecutive months, led the increase, $0.8 billion or 2.5 percent to $34.7 billion. Shipments of manufactured nondurable goods, down following six consecutive monthly increases, decreased $3.9 billion or 1.2 percent to $321.1 billion. This followed a 2.2 percent May increase. Petroleum and coal products, down following five consecutive monthly increases, drove the decrease, $4.5 billion or 6.3 percent to $67.1 billion.
• Unfilled Orders for manufactured durable goods in June, up twenty-three of the last twenty-four months, increased $9.6 billion or 0.6 percent to $1,590.6 billion, unchanged from the previously published increase. This followed a 0.7 percent May increase. Transportation equipment, up ten of the last eleven months, led the increase, $4.0 billion or 0.4 percent to $1,002.4 billion.
• Inventories of manufactured durable goods in June, up nine consecutive months, increased $2.1 billion or 0.3 percent to $602.1 billion, unchanged from the previously published increase. This followed a 0.1 percent May increase. Transportation equipment, up eight of the last nine months, led the increase, $0.8 billion or 0.4 percent to $190.7 billion. Inventories of manufactured nondurable goods, down following four consecutive monthly increases, decreased $1.2 billion or 0.3 percent to $360.9 billion. This followed a 0.4 percent May increase. Petroleum and coal products, down two consecutive months, drove the decrease, $1.7 billion or 3.6 percent to $46.7 billion. By stage of fabrication, June materials and supplies increased 0.3 percent in durable goods and decreased 0.6 percent in nondurable goods. Work in process increased 0.5 percent in durable goods and decreased 1.8 percent in nondurable goods. Finished goods increased 0.2 percent in durable goods and 0.5 percent in nondurable goods.

The BEA’s key source data and assumptions (xls) for the advance estimate of second quarter GDP indicated on line 143 that they had estimated that the value of durable goods inventories would increase $2.0 billion before any inflation adjustment in June, and this report indicates that total durable goods inventories actually increased in value by $2.1 billion; in addition, on line 144 of the BEA’s GDP source data, they estimated that nondurable goods inventories fell by $1.2 billion in June, while this report indicates that nondurable goods inventories did fall by $1.2 billion…hence, this report thus shows that the BEA had underestimated the change in the manufacturing 2nd quarter GDP inventory component by around $0.1 billion before any inflation adjustment, or by around $0.4 billion on an annualized basis, which would suggest that 2nd quarter GDP might have to be revised upwards by 0.01 percentage points to account for what this report shows…

Wholesale Sales Fell 3.0% in June, Wholesale Inventories Rose 0.2%

The June report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at “$794.1 billion, down 3.0 percent (±0.5 percent) from the revised May level, but were up 14.1 percent (±0.7 percent) from the revised June 2025 level”..…the May preliminary estimate was revised to $818.65 billion from the $817.4 billion in sales reported last month, and as a result “the April 2026 to May 2026 percent change was revised from the preliminary estimate of up 3.4 percent (±0.5 percent) to up 3.5 percent (±0.5 percent)”….as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods produced or finally sold…

On the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods on the shelf or in intermediate storage represent goods that were produced but not sold, and this June report estimated that wholesale inventories were valued at a seasonally adjusted $944.7 billion at month end, up 0.2 percent (±0.2 percent)* from the revised May level, and 4.2 percent (±1.2 percent) higher than in June a year ago, with the May preliminary estimate revised from the $941.8 billion reported last month to $943.1 billion, now a 0.3% increase from April…

In the advance report on 2nd quarter GDP of last week, wholesale inventories were estimated based on the sketchy Advance Report on Wholesale and Retail Inventories, which was released the day before the GDP release…that report estimated that our seasonally adjusted wholesale inventories were valued at $945,938 million at the end of June, up from $943,367 million in May….those figures total $1,482 million more than the $944,710 million for June and $943,113 million for May that this report shows, which means that the quarterly increase in 2nd quarter wholesale inventories used in the GDP report was overestimated at about a $5.93 billion annual rate…assuming there’s no revision or major imbalance in the inflation adjustment to those inventories, that would suggest that the growth rate of 2nd quarter GDP was overestimated by around 0.09 percentage points, just based on what this wholesale report shows…

(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…)