Weekly Economic Trends and Indicators
The Headlines:
Total nonfarm payroll employment in the U.S. increased by 22,000 jobs in August according to the Bureau of Labor Statistics (BLS), which was below expectations. Job growth for May and June was revised downward by a total of 21,000, bringing the revised job growth numbers down to -13,000 for June and +79,000 for July. Preliminary benchmark revisions for total nonfarm payroll employment for the year ending March 2025 were reported to be a decrease of 911,000 jobs. While these benchmark revisions have not been calculated for each month at this time, this early indication shows that the labor market is weaker than previous data indicated.
In a separate report, the BLS reported that total nonfarm payroll employment in the Davenport-Moline-Rock Island, IA-IL metropolitan area increased by 200 from a revised 179,600 to 179,800 in July on a seasonally adjusted basis. Jobs in the metro area decreased by 2,400 before seasonal adjustment from a revised 182,000 to 179,600. Seasonally unadjusted jobs in the metro area in July were down 900 from July 2024. The unemployment rates for counties in the metro area ranged from 4.4% to 5.2% with each county’s unemployment rate up slightly from June.
The Details:
Nationally, the story of the labor market can be told in two parts. Goods-producing employment decreased by 25,000 in July while private service-providing employment increased by 63,000. The losses in goods-producing employment were mostly in construction (-7,000) and durable goods manufacturing (-19,000). Health care and social assistance, where labor demand is less directly connected to economic conditions, added 46,800 jobs in August. Federal and state government employment decreased by a combined total of 28,000 jobs.
In the Quad Cities, most categories of jobs were stable in July. The main driver of the decrease in jobs locally was the seasonal drop in local government education (-3,100). Most of that loss will be gained back in the August data. The increase in unemployment rates locally is in line with seasonal fluctuations. The BLS does not seasonally adjust metro area unemployment rates.
The Context:
Market reaction to the August job market numbers was initially positive on the theory that “bad news is good news.” That is, the weak job numbers all but guarantee a Fed rate cut this month. However, by midday on Friday, as people had a chance to digest the numbers, the sentiment gradually shifted toward the stance that bad news really is bad news. Reaction to the benchmark revision on Tuesday was quite muted. While the downward revision was larger than most analysts expected, it was not enough to move the market.
The slowdown in construction and durable goods manufacturing is at least partly related to tight monetary policy, so lower rates would help as long as it is not too late. Uncertainty over the effect of tariffs continues to be a problem which may also be affecting some areas of the manufacturing sector. Those effects will not quickly reverse, even if rates come down. Any boost to manufacturing from reshoring in response to tariffs is still months, if not years away. Regardless of the long-term outcome, the short-term challenges are very real.
Even so, local manufacturing employment has been quite stable this year with no net change over the last 8 months. Losses in various sectors have been balanced by gains in others.
Next week: More details on the local labor market
