- The U.S. added 235,000 Jobs in August compared to 1.1 million in July
- The ISM Manufacturing Index registered 59.9 in August, while the ISM Services Index was 61.7
- Sales of U.S. light vehicles declined to 13.1 million in August
Top Three Market Headlines
Job Growth SlowsMarkedly in August: The Labor Department announced last Friday that U.S. employers added only 235,000 jobs in August, well short of economists' expectations of 720,000 and much lower than July's increase of 1.1 million. Possibly driven by rising fears about the Covid-19 Delta variant, the leisure and hospitality sector saw no net job gains over the month after averaging 350,000 additions over the previous six months; within this category, 42,000 jobs were lost in food services and drinking places. Although gains slowed, the unemployment rate dropped slightly to 5.2% from 5.4% the previous month.
Business Surveys Indicate Continued U.S. Economic Expansion: Business activity in the U.S. continued expanding in August, according to surveys of business executives released last week by the Institute of Supply Management (ISM). The ISM Manufacturing Index registered 59.9, up slightly from July's level of 59.5. Growth cooled slightly in the services sector, with the ISM Services Index fallingto 61.7 in August from July's all-time high of 64.1, though the August reading remained well above the 50 mark that distinguishes expansion from contraction. Services sector respondents attributed the slower growth to labor shortages, logistic delays, and lack of materials.
Tight Inventories Constrain Vehicle Sales in August: U.S. light vehicle sales plummeted in August, with the seasonally-adjusted annual rate (SAAR) of sales falling 10% from the prior month to a 15-month low of 13.1 million, according to the Bureau of Economic Analysis. The rate of sales is down nearly 30% from a multiyear high SAAR of 18.3 million as recently as March. The key culprit behind the slowdown is dwindling inventory on dealer lots resulting from the persistent semiconductor chip shortage that has constrained production of new vehicles this year. It is estimated that there are less than a million vehicles in inventory for sale at present, down from approximately 3 million two years ago.