August 2024 Market Trends Report

Sector by Sector News: July 2024

Manufacturing Jobs Report

July Manufacturing PMI: 46.8%*

July ISM Employment Index: 43.4% 

*A PMI reading below 50% suggests economic activity is contracting.

Economic activity in the manufacturing industry diminished for the fourth consecutive month in July (down 1.7% from June’s reading), according to the Institute for Supply Management (ISM).

This contraction is reflected by hiring within the industry, which added 1,000 jobs. However, the ISM’s employment index contracted for the second month in a row, bringing the lowest reading since June 2020.

The two-month contraction followed an expansion in May — and seven months of contraction before that. 

10-Month Employment Index Summary

Additionally, the 1,000 added jobs were accompanied by layoffs and hiring freezes across the six large manufacturing sectors, according to respondents to the ISM’s July survey respondents.

“Panelists’ comments in July indicated a notable increase in staff reductions compared to June, supported by the approximately 1-to-1.8 ratio of hiring versus head-count reduction comments” ISM Manufacturing Business Committee Chair Timothy Fiore said. 

Construction Jobs Report

The construction jobs report continues to sidestep the cooling labor market — with 25,000 jobs added in July. Nonresidential construction employers added the vast majority of jobs (16,200), including:

• Nonresidential specialty trade: 11,300 jobs
• Heavy and civil engineering: 2,900 jobs
• Nonresidential building: 2,000 jobs

While job gains in the industry are solid, the unemployment rate among construction workers rose to 3.9% — from 3.3% the preceding month — which was the second lowest ever recorded.

Associated Builders and Contractors Chief Economist Anirban Basu contrasts growth in the construction industry to alarm bells sounding across the greater economy by asking: “How can one suggest that the U.S. economy is heading into recession when contractors are still eagerly hiring workers?”

His reasoning counters the optimism that steady job gains across the sector could inspire:

Contractors collectively remain upbeat regarding their prospects for the next six months. But if the economy continues to weaken, and it appears poised to do precisely that, contractor confidence will begin to ebb. Indeed, the June construction spending data released on Aug. 1 indicate that many construction segments are already in slowdown mode.

Warehousing & Storage Jobs Report 

May Logistics Manager’s Index (LMI): 56.5*

*A LMI above 50 indicates that logistics metrics are expanding.

The July Logistics Manager’s Index (LMI) reported expansion for the eighth consecutive month, showing consistent growth, especially when compared to last year, which marked the fifth consecutive month to hold a new all-time low.

Job gains across warehousing and storage were also encouraging, with 10,700 jobs added, contrasting weak growth across the larger economy.

While some economists are nervously questioning what the weakening jobs market means for the economy, LMI reported positive growth indicators, especially regarding upstream inventory growth:

Based on inventory readings, it seems that firms are anticipating strong spending through the rest of 2024 … This dynamic suggests that retailers are practicing JIT and keeping inventories lean while their upstream partners build up their stores of goods in anticipation of orders that are yet to come.

According to LMI:

Growth is increasing at an increasing rate for:

• Inventory costs
• Warehousing capacity
• Warehousing utilization
• Transportation capacity
• Transportation utilization
• Transportation prices

• Warehousing prices

Growth is contracting for:

• Inventory levels