Weekly Market Commentary August 4, 2025
Week in Review
Markets closed the week on a turbulent note as investors digested a series of revised labor market reports and inflation data that painted a mixed picture of the U.S. economy.
Labor Market: Signs of Softening Amid Conflicting Signals
The week began with the Job Openings and Labor Turnover Survey (JOLTS) showing a modest decline in June, down 0.2% from May, suggesting a slight cooling in labor demand. However, Wednesday’s ADP Nonfarm Employment Change surprised to the upside, posting a gain of 104,000 jobs versus expectations of 77,000. This broke a three-month streak of weak reports and reversed the prior month’s loss of 23,000 jobs.
Despite ADP’s strength, Friday’s Bureau of Labor Statistics Nonfarm Payrolls report told a different story. Payrolls rose by just 73,000, well below the 106,000 expected. More striking were the sharp downward revisions to previous months: May’s job gains were slashed from 144,000 to just 19,000, and June’s from 147,000 to 14,000. The unemployment rate ticked up to 4.2%, while average hourly earnings rose modestly, both in line with forecasts.
Inflation: Mixed Signals but Lower Expectations
Inflation data offered a more subdued counterpoint to the labor market volatility. The Core Personal Consumption Expenditures (PCE) Price Index rose 0.3% month-over-month, slightly above the prior reading but within expectations. The University of Michigan’s July inflation expectations showed a small increase in 1-year forecasts and a dip in 5-year projections, reflecting a broader trend of easing inflation concerns.
Other Economic Highlights
Q2 GDP growth came in at 3.0%, a sharp rebound from last quarter’s -0.5% and well above expectations. Sentiment indicators were mixed: S&P Global and the Institute for Supply Management (ISM) pointed to softening manufacturing outlooks, while the Conference Board’s Consumer Confidence Index came in stronger than expected.
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