This summary features August employment and new-vehicle sales data. The employment report affirmed further slowing in hiring and set the stage for a Fed rate cut later this month. New-vehicle sales in August cooled modestly from July but were boosted by strong sales into rental.
Hiring Slowed Again in August, But New-Vehicle Sales Remain Strong
The employment report for August reflected further weakening in job growth and another rise in unemployment as the economy adjusts to tariffs and slower immigration.
Only 22,000 jobs were created when 75,000 were expected.
The prior two months were revised down for a net decrease of 21,000 fewer jobs than originally estimated, but the negative revisions were all in June, as July was revised slightly higher.
The private sector added 38,000 jobs, while government shed 16,000.
The federal government lost 15,000 jobs, adding to the 82,000 total previously lost since January.
Manufacturing shed 12,000 jobs following a decline of 2,000 in July.
Services produced 63,000 new jobs, which was 22,000 fewer than in July.
Education and health services again had the largest gain in the private sector, with 46,000 jobs created, which was down from 77,000 created in July.
Professional and business services saw a decline of 17,000 jobs, and information and financial activities also saw modest declines of 5,000 and 3,000, respectively.
Employment at auto dealers increased by 1,800 jobs, leaving employment down 12,800 or 1.0% below the February 2020 level.
Total payrolls now exceed February 2020 payrolls by 7.2 million or 4.8%. The three-month moving average of new jobs increased to 29,000 from 28,000 in July.
The headline unemployment rate increased to 4.3% from 4.2%.
The labor force participation rate increased to 62.3% from 62.2%. Participation is down 1.0 percentage points from before the pandemic and represents 2.7 million fewer people in the labor force compared to then, despite having added 7.2 million jobs.
The underemployment rate increased from 7.9% to 8.1%, which is 1.1 percentage points above its level in February 2020.
Monthly average hourly earnings growth was steady at 0.3% with growth year over year slowing to 3.7% from 3.9%.
Bottom Line:Â Layoffs remain subdued, but hiring has slowed to a crawl this summer as businesses have been reluctant to add staffing and are likely to be slow to replace turnover with hopes of improving productivity to cover higher costs from tariffs.
New light-vehicle sales increased 3.0% year over year in August, with one fewer selling day than in August 2024.
By volume, new-vehicle sales increased 5.3% month over month with one more selling day as July.
The August seasonally adjusted annual rate (SAAR) decreased 2.9% to 16.1 million from July’s upwardly revised 16.5 million pace.
The SAAR was up 6.2% from last year’s 15.1 million pace.
Combined sales into large rental, commercial, and government fleets were up 24.9% year over year.
Sales into large rental fleets were up 86.3% year over year, while sales into commercial fleets were up 3.4%, but sales into government fleets were down 20.8%.
Including an estimate for fleet deliveries into dealer and manufacturer channels, the remaining retail sales were estimated to be up 2.5% from last year, leading to an estimated retail SAAR of 13.7 million, which was up 0.6 million from last year’s 13.1 million but down slightly from July’s 13.8 million pace.
The fleet share was 13.8%, which was up from last year’s 13.4% share.Â
The average transaction price (ATP) of a new vehicle in August increased 0.5% from July, with an initial estimate of $49,077, which was up 2.6% year over year. (Check back on Wednesday for the full ATP report.)
The average MSRP increased 0.2% month over month and was up 3.3% year over year.
The average price relative to average MSRP increased to 96.0% from 95.8%, so discounting decreased.
The average incentive from manufacturers decreased 0.6% month over month to $3,540, which was up 2.3% year over year.
Incentives as a percentage of average transaction price decreased to 7.2% from 7.3% and was lower than the 7.3% level one year ago. It was 9.7% in March 2019.
Bottom line: Hiring momentum continued to fade in August, with job growth falling well short of expectations and unemployment inching higher. Businesses are clearly cautious, holding off on expanding staff as they navigate the pressures of tariffs and aim to boost productivity. While layoffs remain low, the pace of hiring has slowed to a crawl, particularly in manufacturing and professional services. Even sectors like education and health care, which had been strong, are showing signs of cooling.
On the automotive front, the market remains resilient. New-vehicle sales rose year over year, driven largely by strong fleet demand – especially from rental companies. Retail sales also improved modestly from last year, though they dipped slightly from July. Pricing stayed firm, with average transaction prices climbing and incentives edging lower, signaling continued strength in consumer demand despite economic headwinds.
Jonathan Smoke
Chief Economist
Jonathan Smoke leads Cox Automotive’s economic and industry insights team, which tracks key metrics and trends impacting both the wholesale and retail markets for vehicles informed by the proprietary data from the company’s businesses and platforms. For 28 years, Smoke has focused on translating data and trends into relevant actionable insights for the industries that represent the biggest purchases that consumers make in their lifetimes: real estate and automotive. Smoke joined Cox Automotive in 2017.
