US private payroll growth slows in August; factory orders rebound in July

News on manufacturing was fairly upbeat. A separate report from the Commerce Department's Census Bureau showed factory orders increased 0.9% in July after dropping 0.2% in June. Orders advanced 6.5% on a year-over-year basis in July. Manufacturing, which accounts for 9.4% of the economy, is getting a tailwind from the AI buildout, though the six-month U.S.-Israeli war with Iran is straining supply chains and keeping input prices elevated. An Institute for Supply Management survey on Tuesday showed manufacturers grumbling about higher prices in August because of the war and import tariffs, with some describing the economy as "annoying." The rebound in factory orders in July was led by a 12.7% surge in orders for civilian aircraft and parts. Orders for motor vehicle bodies, parts and trailers rose 0.4%. Machinery orders increased 0.8%. Orders for computers and electronic products dropped 1.1%, but were up 14.3% year over year. Orders for electrical equipment, appliances and components fell 0.3%. The Census Bureau also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, were unchanged in July rather than up 0.2%, as reported last week. Shipments of these so-called core capital goods increased 1.2% instead of the initially estimated 1.4%. The slowdown in core capital goods orders in July was likely temporary. The government last week reported a surge in capital goods imports in July. The AI spending frenzy is also fueling imports and business spending on equipment. WASHINGTON, Sept. 2 (Reuters) - U.S. private payrolls increased less than expected in August as strength in the education and health services sector was offset by job losses in manufacturing and a few other industries. Private employment rose by 38,000 jobs last month after an upwardly revised 46,000 in July, the ADP National Employment Report showed on Wednesday. Economists polled by Reuters had forecast private employment would advance by 48,000 after a previously reported rise of 44,000 in July. Education and health services payrolls increased by 45,000 positions. The leisure and hospitality sector added 16,000 jobs, while financial activities payrolls rose by 6,000. The construction sector added 12,000 positions. But manufacturing shed 17,000 jobs while the professional and business services sector lost 16,000 positions. There were job losses in the trade, transportation and utilities sector as well as information, natural resources and mining. The ADP report is jointly developed with the Stanford Digital Economy Lab, and was published ahead of the release on Friday of the Bureau of Labor Statistics' more comprehensive and closely watched employment report for August. ADP has been a poor gauge of the BLS' private payrolls estimate. The BLS reported on Tuesday that there were 1.05 open jobs for every unemployed person in July, little changed from June and consistent with stable labor market conditions. Though economists continue to view the labor market as remaining in a "slow-hire, slow-fire" state, momentum has slowed since the surge in the spring. The labor market was hobbled last year by policy uncertainty, including President Donald Trump's sweeping import tariffs. Economists said there was no compelling evidence that rapid adoption of artificial intelligence was hindering job growth. Some of them cautioned that the White House's immigration crackdown, marked by deportations and cancellations of work authorization for some immigrants, could undercut job growth. Private payrolls likely increased by 45,000 jobs in August after rising by 30,000 in July, according to a Reuters survey of economists. Nonfarm payrolls are expected to have rebounded by 56,000 jobs last month after a surprise decline of 23,000 in July. That rebound would partly reflect a recovery in local government education payrolls. ### Spring strength has faded "We would frame that healthier rise in employment in August, however, as partly making up for acute weakness over the previous few months," said Oliver Allen, a senior U.S. economist at Pantheon Macroeconomics. "The bigger picture likely will remain that the apparent upturn in employment growth in the spring already has faded." The unemployment rate is forecast to be unchanged at 4.1%. Economists saw downside risks to August's employment report after Temporary Protected Status for hundreds of thousands of Haitians recently ended, impacting their work authorization. Bill Adams, chief economist at Fifth Third Commercial Bank, said he expected nonfarm payrolls to drop by 25,000 jobs in August. "Immigration policy changes likely held back payrolls growth in August," Adams said. "AI is having less of an effect on hiring than other factors like reduced immigration or tariff whiplash."

US private payroll growth slows in August; factory orders rebound in July

Factory orders rebound in July

Private payroll growth slows in August

Forecasts point to softer labor market momentum

Spring strength has faded

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