Economic Update 9/4/2026
5 Key Takeaways
1. Non-Farm Payrolls for August were up by 162,000, significantly above the July upwardly revised job increase of 23,000.
2. The revitalization of “supply-side economics” may be the key to controlling and bringing down inflation.
3. Labor Force Participation Rate grew for a third month in a row while unemployment remains stable.
4. Average workweek for the month was up by 0.1 to 34.4 hours, could be an early indication of more full-time positions being part of the mix.
5. CPI and PPI inflation indicators likely to influence the Feds next meeting on the 15th and 16th.
Welcome to a long holiday weekend. We begin this Friday with a much stronger than anticipated employment report. Non-Farm Payrolls for August were up by 162,000. This number is significantly above the July upwardly revised job increase of 23,000 and the forecasted gain of 56,000. The August release is the highest employment gain since March of this year.
The largest sectors in job growth were restaurants/bars and, not surprisingly, local government education. We always expect to see a rise in educational employment as the new school year begins. Another positive aspect of the report was the addition of 16,000 jobs in the manufacturing sector. This continues growth in the manufacturing sector, which we have seen the past three months.
A Revitalization of “Supply-Side Economics”
This Administration has put a high degree of effort into this area, and this trend would indicate a positive response is occurring. As I have been saying for a while, the revitalization of “supply-side economics” is the key to controlling and bringing down inflation. As we increase domestic production of goods and services, inflation will come down due to supply exceeding demand. To use an old term: that is a win-win.
The Growth of Private Payrolls
Additional factors related to the above report are also very promising from an economic perspective. Private payrolls in August grew by 127,000. Again, this is a very positive comparison to the July level of 71,000. Not only did we see gains in the private sectors of hospitality and manufacturing, as mentioned earlier, healthcare continues to be a strong sector for employment growth.
Average hourly earnings for August grew by 0.3% as compared to 0.2% the prior month. Another comparison, often overlooked, is the average work week for the month was up by 0.1 to 34.4 hours. This is the highest level since March of 2024. We have seen a fairly high percentage of new jobs in the part-time arena. This might be an early indication of more full-time positions being part of the mix. In any event, it will be worth watching going forward.
Inflation Decline Indicators
In August, we also saw the Labor Force Participation Rate grow to 61.60% from 61.40% in July. This is the third monthly gain and shows a positive trend of workers re-entering the labor pool as job availability increases. Another associated release this week was a rise in Non-Farm Labor Productivity of 1.4% during the second quarter of this year. This compares very favorably to the rise of 0.8% during the first quarter. Interestingly, Manufacturing Productivity for the quarter increased by 2.4%. This was the strongest reading since the second quarter of 2021. I think the various manufacturing related factors in these reports provide a solid base for inflation to begin to decline over the next few months.
Upcoming Fed Meeting
Next week we will see the economic releases for both CPI and PPI inflation indicators. Given that the Fed meets next on the 15th and 16th of this month, both reports will factor into their decision making as it relates to the level of the Fed Funds Rate. I think, as of now, they will likely leave rates unchanged. Several indications, such as shown above, should allow The Fed the ability to not raise rates as inflation seems to be easing somewhat. However, next week’s releases will play an important role in their decision process. Stay tuned; we will obviously be watching and passing along our thoughts regarding the new economic numbers as they are released.
In the meantime, enjoy the Labor Day weekend and the extended time off for the holiday. We are nearing the beginning of Fall, so get outdoors and enjoy the blue skies and sunshine.
Most importantly, with football season starting: GO BIG RED!!
