- The U.S. manufacturing sector expanded for the fourth straight month in August
- Nonfarm payrolls grew by 1.4 million in August, while the unemployment rate fell to 8.4%
- The Fed’s Beige Book, which is released eight times per year, is a collection of anecdotal information regarding the current economic condition
Top Three Market Headlines
U.S. Manufacturing Expands: Last Tuesday, the Institute for Supply Management (ISM) reported that its Purchasing Managers Index (PMI) registered 56% for August, an increase from 54.2% in the prior month. This the 4th consecutive month above 50%, signaling that the manufacturing sector has largely rebounded since its April lows. The PMI is based on data compiled from a survey of purchasing and supply executives across 18 manufacturing industries. An index reading above 50% indicates an expansion, while a reading below 50% indicates a contraction. 15 out of the 18 industries surveyed reported growth during the month led by wood products, plastics & rubber products and food, beverage & tobacco products.
August Jobs Report: The Labor Department reported last Friday that U.S. nonfarm payrolls grew by 1.4 million in August. Although it’s slightly ahead of economists’ expectations, the growth is smaller in magnitude compared to gains in the prior 3 months. Notably, the 10.7 million jobs regained thus far, are still well short of the 22 million jobs lost in March and April. Government hiring led the gains along with leisure and hospitality, retail, business services, health care, and education. Meanwhile, the unemployment rate fell to 8.4% in August, down significantly from 10.2% in July. This is the lowest rate since the pandemic hit but remained above the historically low rate of 3.5% in February.
Fed’s Beige Book Saw Modest Economic Growth: Last week The Federal Reserve released its most recent Beige Book. The report noted modest economic growth over the summer, but growth levels remain well below pre-pandemic levels. The recovery has been segmented across industries. Residential Real Estate, Auto Sales, and Manufacturing benefitted as restrictions have eased, while Tourism and Restaurants continue to deal with consumer hesitations and restrictive policies put forth by local governments. A common theme across the country remains about “uncertainty and volatility related to the pandemic”. The report also noted emerging labor shortage issues as workers stay home due to a lack of childcare options and the potential for remote school in the fall.