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, wherein the national payroll processor reported a 38,000 increase in private jobs in August, the light vehicle sales report for August from Omida, aka Wards Automotive, which estimated that vehicles sold at a 16.8 million annual rate in August, up from the 16.3 million annual sales rate reported in July, and up from the 16.5 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) fell to 54.6% in August, down from 55.6% in July, which means that a smaller plurality of manufacturing industry purchasing managers reported improving metrics 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 55.4% in August, up from 54.1% in July, indicating a larger plurality of service industry purchasing managers reported improvement in various facets of their business in August than in July…

Employers Added 162,000 Jobs in August; Unemployment Rate Unchanged

The Employment Situation Summary for August indicated a payroll jobs increase that was above expectations and the highest initial report since March, an unemployment rate that was unchanged, and an increase in both the employment rate and the labor force participation rate….estimates extrapolated from the establishment survey data indicated that employers added a seasonally adjusted 162,000 jobs in August, after the payroll job change for July was revised from a decrease of 23,000 jobs to an increase of 21,000 jobs, while the payroll jobs change for June was revised from an increase of  20,000 jobs to an increase of 31,000 jobs, revisions which combined means that this report indicates an increase of 217,000 more jobs than were reported last month, in contrast to the 50,000 job addition that was expected …the unadjusted data shows that there were actually 154,000 more payroll jobs in August, as downward adjustments to sectors that normally see an increase in August, such as education, were mostly offset by upward adjustments to sectors that normally see a job decrease, such as retail sales and leisure and hospitality….

Seasonally adjusted job increases were spread through the goods producing, service providing, and government sectors, with a loss of 23,000 jobs in the information sector the only notable 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 rose by 162,000 in August, higher than the average monthly gain of 31,000 over the prior 12 months. In August, employment increased in food services and drinking places and in local government education. The information industry lost jobs. (See table B-1.)
• Employment in food services and drinking places increased by 59,000 in August, well above the average monthly gain of 12,000 over the prior 12 months.
• Local government education added 42,000 jobs in August, largely offsetting a decrease in the prior month. Local government education has shown little net change since January 2025.
• In August, employment in manufacturing continued its upward trend (+16,000) and is up by 58,000 since a recent low in December 2025. Employment in machinery manufacturing (+6,000) and in fabricated metal product manufacturing (+6,000) continued trending up in August.
• Employment in health care continued to trend up in August (+13,000) but at a slower pace than the average monthly gain over the prior 12 months (+32,000). Over the month, home health care services (+11,000) and hospitals (+8,000) added jobs.
• Information employment declined by 23,000 in August, following losses that had averaged 8,000 per month over the prior 12 months. In August, job losses occurred in computing infrastructure providers, data processing, web hosting, and related services (-8,000), in publishing industries (-7,000), and in broadcasting and content providers (-5,000).
• Construction employment changed little in August (+22,000). Employment in nonresidential specialty trade contractors continued to trend up (+8,000), similar to the average monthly gain over the prior 12 months (+6,000).
• Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; wholesale trade; retail trade; transportation and warehousing; financial activities; professional and business services; social assistance; and other services.
  

The establishment survey also showed that average hourly pay for all employees rose by 10 cents an hour to $37.75 an hour, after it had increased by a revised 5 cents an hour in July; at the same time, the average hourly earnings of production and non-supervisory employees increased by 11 cents to $32.53 an hour….employers also reported that the average workweek for all private payroll employees rose by a tenth of an hour to 34.4 hours, while average weekly hours for production and non-supervisory personnel were unchanged at 33.8 hours…meanwhile, the manufacturing workweek increased by 0.1 hour to 40.5 hours, while average factory overtime was unchanged at 3.1 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 569,000 to 162,746,000, while the similarly estimated number of those who would be counted as unemployed rose by 115,000 to 7,031,000; which together meant that August saw a net rounded increase of 683,000 to 169,777,000 in the total labor force…since the working age population had grown by 133,000 over the same period, that meant the number of employment aged individuals who were not in the labor force fell by a rounded 551,000 to 105,638,000….the increase in the total labor force was enough to raise the labor force participation rate, from 61.4% in July to 61.6% in August, even as it was still down from 62.3% in August of last year….at the same time, the increase in number employed vis-a-vis the population was great enough to increase the employment to population ratio, which we could think of as an employment rate, from 58.9% in July to
59.1% in August, which was still down from 59.6% a year ago…however, the increase in the number counted as unemployed was not enough to raise the unemployment rate as a percentage of the labor force, as it remained at 4.1%….meanwhile, the number who reported they were involuntarily working part time fell by 414,000 to 4,390,000 in August, which meant that the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, fell from 7.9% in July to 7.7% in August, the lowest U6 unemployment 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 it alongside the press release to avoid the need to scroll up and down the page to access the tables..

Job Openings Rose in July, Hiring, Layoffs, and Job Quitting All Fell

The Job Openings and Labor Turnover Survey (JOLTS) report for July from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 89,000, from 7,182,000 in June to 7,271,000 in July, after June’s job openings were revised 177,000 lower, from the 7,359,000 reported a month ago to 7,182,000 with this report…July’s jobs openings were still 2.6% higher than the 7,089,000 job openings reported for July a year ago, as the job opening ratio expressed as a percentage of the employed rose from 4.3% in June to 4.4% in July, and was also up from 4.3% in July a year ago….a 76,000 job opening increase to 429,000 job openings in durable goods manufacturing appears to be the largest percentage increase in openings this month, while a decrease from 383,000 to 316,000 job openings in transportation, warehousing, and utilities looks to be the largest percentage decrease… (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 5,054,000, down by 278,000 from the revised 5,332,000 who were hired or rehired in June, as the hiring rate as a percentage of all employed fell from 3.4% in June to 3.2% in July, while it was also down from the 3.3% hiring rate in July of a year earlier (details of hiring by sector since March are in table 2)….meanwhile, total separations fell by 265,000, from 5,337,000 in June to 5,072,000 in July, while the separations rate as a percentage of the employed also fell from 3.4% in June to 3.2% in July, while it was also down from the 3.3% separations rate in July a year ago (see table 3)…subtracting the 5,072,000 total separations from the total hires of 5,054,000 would imply a decrease of 18,000 jobs in July, as opposed to the revised payroll job increase of 21,000 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 3,056,000 of us voluntarily quit our jobs in July, down by 157,000 from the revised 3,213,000 who quit their jobs in June, while the quits rate, widely watched as an indicator of worker confidence, fell from 2.0% in June to 1.9% in July, and it was also down from the 2.0% quits rate in July a year earlier (see details in table 4)….in addition to those who quit, another 1,666,000 were either laid off, fired or otherwise discharged in July, down by 119,000 from the revised 1,785,000 who were discharged in June, as the discharges rate fell from 1.1% in June to 1.0% in July of all those who were employed during the month, which was also down from the 1.1% discharges rate of a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 350,000 in July, up from the revised 340,000 other separations 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 24.4% in July on Higher Imports of Capital Goods, Lower Exports of Crude Oil

Our trade deficit increased by 24.4% in July, after decreasing by a revised 6.0% in June, as the value of our exports decreased while the value of our imports increased…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 $17.4 billion to a rounded $88.6 billion in July, up from a revised June deficit of $71.2 billion, which had previously been reported at $73.3 billion…trade figures going back to January were also revised with this report, which on net left the 2nd quarter trade deficit about $5.7 billion lower than was previously reported, suggesting a large upward revision to 2nd quarter GDP, the magnitude of which depends on the 1st quarter revisions, which will be recomputed and included in the annual revision to GDP at the end of September…

After rounding, the value of our exports fell by $6.6 billion, or 2.1%, to $310.7 billion in July, on a $6.2 billion decrease to $201.0 billion in our exports of goods, and a $0.4 billion decrease to $109.7 billion in our exports of services, while our imports rose by $10.8 billion, or 2.8 percent, to $399.3 billion, on an $11.4 billion increase to $320.6 billion in our imports of goods, partly offset by a $0.6 billion decrease to $78.7 billion in our imports of services…export prices were on average 1.3% lower in July, so a good part of this month’s decrease in exports was due to lower prices, and real exports were likely only 0.8% lower, while import prices were 0.4% lower, meaning that the increase in the value of our imports was despite lower prices, and that our real imports likely rose around 3.2%..

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 decrease in our exports and the increase in our imports:

Exports of goods on a Census basis decreased $5.9 billion.

•     Industrial supplies and materials decreased $8.7 billion.
  • Crude oil decreased $4.5 billion.
  • Nonmonetary gold decreased $3.9 billion.
• Capital goods increased $1.9 billion.
• Consumer goods increased $1.7 billion.
  • Pharmaceutical preparations increased $1.0 billion.

  Net balance of payments adjustments decreased $0.3 billion.

Imports of goods on a Census basis increased $12.0 billion.

• Capital goods increased $14.4 billion.
  • Computers increased $6.9 billion.
  • Computer accessories increased $6.6 billion.
  • Semiconductors increased $1.2 billion.
• Industrial supplies and materials decreased $1.8 billion.
  • Crude oil decreased $1.8 billion.

  Net balance of payments adjustments decreased $0.6 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 July figures show surpluses, in billions of dollars, with Netherlands ($7.8), South and Central America ($6.6), Hong Kong ($3.1), United Kingdom ($2.5), Brazil ($2.4), Singapore ($1.9), Saudi Arabia ($1.3), Australia ($1.2), and Belgium ($0.9). Deficits were recorded, in billions of dollars, with Mexico ($27.5), Vietnam ($23.3), Taiwan ($18.1), China ($15.2), South Korea ($10.4), European Union ($8.9), Germany ($5.6), India ($5.0), Malaysia ($4.8), Japan ($4.2), Ireland ($3.9), Canada ($3.2), Italy ($2.5), France ($1.3), Switzerland ($0.6), and Israel ($0.5).

• The deficit with Mexico increased $7.2 billion to $27.5 billion in July. Exports decreased $0.2 billion to $32.6 billion and imports increased $7.0 billion to $60.1 billion.
• The balance with Switzerland shifted from a surplus of $2.9 billion in June to a deficit of $0.6 billion in July. Exports decreased $2.0 billion to $4.4 billion and imports increased $1.5 billion to $5.0 billion.
• The deficit with Canada decreased $3.7 billion to $3.2 billion in July. Exports increased $0.5 billion to $29.3 billion and imports decreased $3.3 billion to $32.5 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 the 2nd quarter's real exports of goods averaged 157,830.7 million monthly in 2017 dollars, while July’s inflation adjusted exports came in at 150,810 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 16.6% annual rate below those of the 2nd quarter, or at a pace that would subtract about 1.18 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 250,698.3 million monthly in chained 2017 dollars, while the similarly inflation adjusted July goods imports were at 257,197 million…that would indicate that so far in the 3rd quarter, our real imports of goods have grown at a 10.78% 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 10.78% rate would subtract about 1.11 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 2.29 percentage points from the growth rate of 3rd quarter GDP….

You might 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 fell $0.4 billion in July, while our imports in services fell $0.6 billion, which would suggest a small boost to GDP from the services side of the international trade ledger…

Construction Spending Fell 0.5% in July after June Spending was Revised Slightly Higher

The Census Bureau report on construction spending for July (pdf) estimated that the month’s seasonally adjusted construction spending would work out to $2,157.6 billion annually if extrapolated over an entire year, which was 0.5 percent (±0.8 percent)* below the revised annualized estimate of $2,167.7 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 less than 0.1% higher, from $2,166.5 billion to $2,167.7 billion, while the annual rate of construction spending for May was revised a bit lower, from $2,168.5 billion to $2,168.4 billion….on net, those revisions mean that construction during the 2nd quarter was about $1.1 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 0.02 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 $1,614.2 billion, 0.5 percent (±0.3 percent) below the revised June estimate of $1,622.9 billion. Residential construction was at a seasonally adjusted annual rate of $859.0 billion in July, 1.3 percent (±1.3 percent)* below the revised June estimate of $870.6 billion. Nonresidential construction was at a seasonally adjusted annual rate of $755.2 billion in July, 0.4 percent (±0.3 percent) above the revised June estimate of $752.4 billion.
• Public Construction: In July, the estimated seasonally adjusted annual rate of public construction spending was $543.4 billion, 0.2 percent (±1.6 percent)* below the revised June estimate of $544.7 billion. Educational construction was at a seasonally adjusted annual rate of $112.3 billion, 0.2 percent (±1.6 percent)* below the revised June estimate of $112.5 billion. Highway construction was at a seasonally adjusted annual rate of $150.3 billion, 0.2 percent (±4.6 percent)* below the revised June estimate of $150.6 billion.

Construction spending data 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 PPI indices and a number 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 to make an approximate estimate…

That price index showed that aggregate construction costs were up 2.2% in July, after rising 0.1% in June, and after rising 0.1% from April to May…on that basis, we can estimate that July construction costs were roughly 2.4% more than those of April, roughly 2.3% more than those of May, and obviously 2.2% 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 nominal dollars for the months of the second quarter is given as 2,167,698 for June, 2,168,396 for May, and 2,168,231 for April, while it was at 2,157,581 million in July …thus to compare July’s inflation adjusted construction spending to inflation adjusted spending of the second quarter, our arithmetic formula becomes: 2,157,581 / (((2,167,698 * 1.022) + (2,168,396 * 1.023) + (2,168,231 * 1.024)) / 3) = 0.97277, meaning real construction spending in July was down 2.72% vis a vis the 2nd quarter, or down at a 10.5% 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 0.35 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 rose by $5.8 billion or 0.9 percent to $663.6 billion, following a decrease of 0.2% to $657.8 billion in June, which was revised from the 0.3% decrease to $656.5 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, up following two consecutive monthly decreases, increased $5.8 billion or 0.9 percent to $663.6 billion, the U.S. Census Bureau reported today. This followed a 0.2 percent June decrease. Shipments, up nine of the last ten months, increased $5.3 billion or 0.8 percent to $658.8 billion. This followed a virtually unchanged June increase. Unfilled orders, up twenty-four of the last twenty-five months, increased $9.9 billion or 0.6 percent to $1,600.3 billion. This followed a 0.6 percent June increase. The unfilled orders-to-shipments ratio was 6.81, down from 6.84 in June. Inventories, up ten consecutive months, increased $3.5 billion or 0.4 percent to $966.9 billion. This followed a 0.1 percent June increase. The inventories-to-shipments ratio was 1.47, unchanged from June.
• New Orders for manufactured durable goods in July, up four of the last five months, increased $3.6 billion or 1.1 percent to $339.4 billion, unchanged from the previously published increase. This followed a 0.6 percent June increase. Transportation equipment, up following two consecutive monthly decreases, led the increase, $2.6 billion or 2.3 percent to $116.2 billion. New orders for manufactured nondurable goods increased $2.2 billion or 0.7 percent to $324.2 billion. 
• Shipments of manufactured durable goods in July, up ten of the last eleven months, increased $3.1 billion or 0.9 percent to $334.6 billion, down from the previously published 1.0 percent increase. This followed a 1.0 percent June increase. Transportation equipment, up nine of the last ten months, led the increase, $1.4 billion or 1.3 percent to $111.6 billion. Shipments of manufactured nondurable goods, up seven of the last eight months, increased $2.2 billion or 0.7 percent to $324.2 billion. This followed a 0.9 percent June decrease. Petroleum and coal products, up six of the last seven months, led the increase, $1.6 billion or 2.4 percent to $69.8 billion.
• Unfilled Orders for manufactured durable goods in July, up twenty-four of the last twenty-five months, increased $9.9 billion or 0.6 percent to $1,600.3 billion, unchanged from the previously published increase. This followed a 0.6 percent June increase. Transportation equipment, up eleven of the last twelve months, led the increase, $4.6 billion or 0.5 percent to $1,006.3 billion.
• Inventories of manufactured durable goods in July, up ten consecutive months, increased $2.4 billion or 0.4 percent to $604.7 billion, unchanged from the previously published increase. This followed a 0.4 percent June increase. Primary metals, up seventeen consecutive months, led the increase, $0.8 billion or 1.5 percent to $52.0 billion. Inventories of manufactured nondurable goods, up five of the last six months, increased $1.1 billion or 0.3 percent to $362.2 billion. This followed a 0.3 percent June decrease. Petroleum and coal products, up following two consecutive monthly decreases, led the increase, $0.8 billion or 1.6 percent to $47.6 billion. By stage of fabrication, July materials and supplies increased 0.2 percent in durable goods and decreased 0.1 percent in nondurable goods. Work in process increased 0.6 percent in durable goods and 1.1 percent in nondurable goods. Finished goods increased 0.4 percent in durable goods and 0.3 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 valued 0.4% higher at $329,960 million; the value of work in process inventories rose 0.7% to $273,540 million, and materials and supplies inventories were valued 0.1% higher at $363,362 million.…at the same time, the July producer price index reported that prices for finished goods were on average 0.7% lower, that prices for intermediate processed goods were on average 0.6% lower, while prices for unprocessed goods were 1.8% lower….assuming similar valuations for like types of inventories, those price changes would suggest that July’s real finished goods inventories were about 1.1% higher, that real inventories of intermediate processed goods were about 1.3% higher, and real raw material inventories were about 1.9% higher…since real NIPA factory inventories were down sharply in the 2nd quarter, accounting for about two thirds of the quarter’s inventory decrease, that this report appears to indicate a modest real increase in aggregate July factory inventories would therefore mean that the difference between the 2nd quarter decrease and the July increase 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…)