Economic Outlook for August 2024

Purchasing Managers Index (PMI): The PMI for August 2024 registered at 48.6, which is the same as July. However this still indicates a fourth consecutive month of contraction in the manufacturing sector. New orders and production levels continue to struggle, and despite some easing in supply chain disruptions, weak demand is a key factor in this downturn.

Unemployment Rate: The unemployment rate in August held steady at 4.3%, unchanged from July. Temporary layoffs and a slowdown in hiring continue, with fewer job openings across many sectors. While healthcare and construction saw some resilience, the broader labor market faces economic uncertainty.

Non-Farm Payroll: In August, the U.S. economy added 142,000 jobs, which is an large increase from July but still well below expectations. This continued slowdown in job growth reflects ongoing weakness in the labor market. Wage growth remains poor, with average hourly earnings increasing by only 0.2%, contributing to growing concerns about consumer purchasing power.

Market Outlook: Financial markets remain volatile as mixed economic data for August points to persistent challenges. With inflation moderating and the labor market showing signs of softening, the likelihood of a Federal Reserve rate cut in the coming months has increased. Investors remain cautious, with the risk of a deeper economic slowdown looming.

Key Economic Data:

• Federal Funds Rate: 5.50% (unchanged)
• Unemployment Claims: 232K (down slightly from 249K in July)
• ISM Manufacturing PMI: 48.0 (further contraction from July’s 48.6)
• Average Hourly Earnings (m/m): 0.2% (unchanged from July)
• ISM Services PMI: 55.2, showing robust growth in services, contrasting with manufacturing weakness.

In conclusion, August 2024 data indicates ongoing challenges for the U.S. economy, with weak manufacturing performance, a slowing labor market, and softer wage growth. These trends suggest that a broader economic slowdown may continue into the latter part of the year, with heightened risks of a recession.