Jobs Friday! Job growth gets even smaller, even as workers are more productive

It’s Jobs Friday again. Recall that after the bad numbers in the last one, it led to the Trump Administration freaking out and firing the director of the Bureau of Labor Statistics for confirming what all other data had been showing – the US economy is stalling out.

Well, let’s see if this latest report shows anything different (and whether there’s any funny business going on).

Total nonfarm payroll employment changed little in August (+22,000) and has shown little change since April, the U.S. Bureau of Labor Statistics (BLS) reported today. The unemployment rate, at 4.3 percent, also changed little in August. A job gain in health care was partially offset by losses in federal government and in mining, quarrying, and oil and gas extraction….

The change in total nonfarm payroll employment for June was revised down by 27,000, from +14,000 to -13,000, and the change for July was revised up by 6,000, from +73,000 to +79,000. With these revisions, employment in June and July combined is 21,000 lower than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.)

So really no difference, other than the fact that we had a (seasonally-adjusted) loss of jobs in June after revision. That’s the first decline since December 2020 – a time when COVID winter had caused further shutdowns and retrenchment, and TrumpWorld was busy plotting ways to overturn the election they had just lost.

The last 6 months have added an average of less than 70,000 jobs a month, less than half what was being gained in the 6 months prior to that, and well below what we were seeing in the prior 3 1/2 years under Joe Biden.

The bad numbers include losses in both construction and manufacturing. Jobs have been getting lost in manufacturing for the last 2 years, but now construction jobs are also on the slide, matching a general decline in activity in the country. Construction lost 7,000 jobs in August and lower-than-usual hiring for June and July led to small seasonal-adjusted losses in those months.

US blue-collar job growth has completely stagnated, hitting the lowest level since the onset of the pandemic—manufacturing is currently losing jobs at a rapid pace, and growth in construction/transportation has slowed to a crawl

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— Joey Politano🏳️‍🌈 (@josephpolitano.bsky.social) September 5, 2025 at 7:56 AM

Two sectors kept the August jobs report from showing its second loss in 3 months – health care/social assistance (+46,800) and leisure/hospitality (+28,000). In addition, the leisure/hospitality “growth” was actually lower-than-normal late Summer layoffs (87,000 fewer jobs before seasonal adjustment). So even the good news isn't that great.

The household survey also showed a slumping situation, with a second straight increase of 0.1%, this time to 4.3%. If there’s a positive, the labor force and number of people working both went up (labor force +436,000, employed +288,000), but we also are nearing 7.4 million unemployed, which is the most we’ve had in nearly 4 years. Just in time for higher premiums for Obamacare insurance to appear, and for millions to be cut off of Medicaid.

Nominal wage growth is holding up, but only at a moderate pace.

Average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents, or 0.3 percent, to $36.53 in August. Over the past 12 months, average hourly earnings have increased by 3.7 percent. In August, average hourly earnings of private-sector production and nonsupervisory employees rose by 12 cents, or 0.4 percent, to $31.46.

If July’s increase in prices at the business level result in higher prices for consumers in August, that 0.27% increase in hourly earnings will be a loser in real wages. The only post-COVID time we have had lower than 3.7% wage growth over 12 months was the 3.6% rate in July 2024, when consumer inflation was basically the same as it is now and trending down, but we were being told that the rising cost of living was a huge problem and concern.

So this looks like a US jobs market that has flatlined. If you need lower interest rates to refinance a bunch of debt (the situation a lot of oligarchs and tech companies are in), that's a good thing for you. But it's not so great if you actually are trying to work for a living and/or make ends meet.

I’ll note one other report from this week, one which showed an upward revision in Q2 productivity.

Nonfarm business sector labor productivity increased 3.3 percent in the second quarter of 2025, the U.S. Bureau of Labor Statistics reported today, as output increased 4.4 percent and hours worked increased 1.1 percent. (All quarterly percent changes in this release are seasonally adjusted annualized rates.) From the same quarter a year ago, nonfarm business sector labor productivity increased 1.5 percent in the second quarter of 2025…

Manufacturing sector labor productivity increased 2.5 percent in the second quarter of 2025, as output increased 2.4 percent and hours worked decreased 0.1 percent. In the durable manufacturing sector, productivity increased 3.2 percent, reflecting a 3.5-percent increase in output and a 0.3-percent increase in hours worked. Nondurable manufacturing sector productivity increased 1.9 percent, as output increased 1.3 percent and hours worked decreased 0.6 percent. Total manufacturing sector productivity increased 1.6 percent from the same quarter a year ago. This is the largest four-quarter gain in manufacturing productivity since the second quarter of 2021, when it increased 4.8 percent.

If businesses are using technology and other means to squeeze out more products per worker, that would help explain a couple of riddles that have been in the 2025 economy in the last 6 months or so. These companies may be simply using machines and productivity to avoid hiring, and letting the jobs dwindle through attrition while grabbing the profits….or to absorb some of the higher costs of tariffs without having to pass much of the cost onto consumers.

Using productivity vs adding workers for output growth certainly seems to be the case with manufacturing.

See the lower hours worked but higher outputs and productivity? Maybe this also explains why all the new US construction of factories during the Biden years hasn’t translated into growth of manufacturing jobs over the last 3 years. But that doesn't seem like a sustainable way to run an economy, especially one that won’t give health care or other supports to the workers that CEOs want to use technology to replace and/or stagnate wages with.

And as I’ve asked before – what’s going to re-accelerate the economy in the coming months to change this course? Wage and job growth is flatlining as prices go up, consumer spending is currently sluggish and the one-time boosts to get ahead of Trump Admin changes are going to end sooner than later (especially as federal incentives for electric vehicle purchases run out at the end of this month).

Sure, interest rates might get a bit lower for borrowers. But if there’s no money available to buy things and asset prices fall as these Bubbles deflate, how is that going to make the real economy grow? Maybe we’re not in recession at this time, but it sure doesn’t feel like things are trending up, do they?