This Week’s Economic Update, September 11, 2023

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Twenty-two years ago, evil flew from the skies and changed our lives and country forever.  That day we lost 2,753 innocent people in the attacks.  Since then we have lost over 7,000 service members in war related activities.  There has been well over 100,000 military personnel that have been injured.  Please take time today to consider the sacrifice that our service people and their families have made to protect us from the enemies that tried to destroy us.  For those of you who read my updates and have served our country, protecting it from those who have targeted harm to us, Thank You for Your Sacrifice.

The labor market continues to be strong.  Non-farm payrolls jumped in August, rising for the third month in a row.  The largest increases were in the health care and hospitality segments.  While the unemployment rate, designated as U3 rose, it was primarily due to those who were not actively looking decided that the jobs and the pay were now worthy of their interest. 

Average weekly hours worked in August rose by .1 to 34.4.  The level has been static for the last 8 months moving between 34.3 and 34.4. Manufacturing hours moved to 40.1 indicating possible improvement in the outlook for this segment of the economy.  The labor participation rate climbed to its highest point since February of 2020 hitting 62.8%.  This is comparable to the 2015-2019 period.  Due to changes in our demographics, we are unlikely to hit the peak levels back in 2000 of 68%.  As the baby boomers retire, pushing the level over 63.5 will be extremely difficult.

During the first week of September, initial jobless claims fell to 216,000 from 229,000.  While layoffs are occurring in some areas, it appears that job seekers are quickly finding replacement positions.  Continuing jobless claims fell last week by 40,000.  Employers continue to struggle to find qualified candidates to fill positions. 

The ISM manufacturing report for August rose from 46.4 to 47.6, still in contraction territory, but improving.  Within the report the various indicators provide a mixed bag for the future.  New orders are contracting faster than expected.  However, the backlog of orders appears to be leveling out so there is some runway for continued production.  Production levels are static.  Supply chain issues have been corrected.  Overall, if demand were to pick up slightly, we could see manufacturing move out of the contraction area for the first time since last October.

The ISM services report achieved a nice jump in August, moving up from 52.7 to 54.5.  In this report all the subcategories look very strong.  Since the service sector makes up nearly 80% of the economy, this should boost the third quarter GDP. Comments in the report were all positive, indicating that this month was not an aberration.

The decline in crude oil supplies has continued over the past two weeks.  Since the end of July, crude supplies have fallen by over 40 million barrels.  As indicated in my prior reports, a drop of this magnitude has not occurred now in 50 years.  Until this last week gasoline production and suppliers were keeping pace with what appears to be a lower demand.  However, last week’s gasoline supplies began falling.  We will have to see if that continues.  For now, higher gas prices are already sweeping across the nation. 

 I can not put my finger on this one yet, but used car prices rose last month by .2%.  It could be a dead cat bounce reflective of families buying vehicles for departing college students, or something else.  New car sales were also up just a bit. With ample supplies in both new and used inventory, it may be difficult to maintain price hikes.  

Have a great week.



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