Employment Report
Total nonfarm payrolls were unchanged in August, after increasing by a downwardly revised 85,000 in July (originally reported as 117,000). June’s data was revised down as well, to 20,000, from 46,000 (total revisions pushed total payrolls down by 58,000 over the previous two months.) Total private jobs increased by 17,000 in August. The unemployment rate was unchanged at 9.1%. Average weekly hours worked declined to 34.2 hours and average hourly earnings for all employees fell $0.03 in August. Despite a modest recovery the labor market remains mired in a slow patch. As the economy gradually picks up in the following quarters, the employment situation should improve as well.

ISM Manufacturing Index
In August, the Institute for Supply Management’s manufacturing index fell 0.3 points to 50.6 from a reading of 50.9 in July.  While the index remains above the threshold of 50 for an expanding economy, several of the components, including production, employment, and exports declined this month.  Despite the drop, business confidence in the manufacturing sector has remained positive despite considerable headwinds. As the economy slowly moves out of its slow patch, we expect business confidence to gradually improve.

Personal Income
In July, personal income rose 0.3% after rising 0.2% in June.  Real disposable personal income fell 0.1% in July following a 0.3% increase in June.  Real personal consumption expenditure growth rose 0.5% following no growth in June. The price index for personal consumption expenditures rose 0.4% offsetting the 0.1% drop in June. Over the year consumer prices are up 2.8%. Core PCE rose 0.2% and is up 1.6% over the year. As consumers increased their spending the saving rate fell 0.5 percentage points to 5.0% in July. The minor income gains and modest consumer spending suggest a modest uptick in consumption in the second half of this year.