Weekly Market Commentary September 8, 2025
Last week was pivotal for labor market data, with several key reports shaping investor sentiment. Markets also digested fresh survey data as participants assessed the economic outlook.
Labor Market Insights
On Wednesday, the July Job Openings and Labor Turnover Survey (JOLTS) report offered a closer look at labor demand. Headline job openings came in below expectations, continuing the trend of softness in the job market. However, voluntary quits (a proxy for worker confidence), held steady at 3.2 million (2.0%). Notably, quits increased in professional and business services, signaling resilience in those sectors, while declines in construction and transportation, warehousing, and utilities pointed to weakness elsewhere.
Friday brought further disappointment as August Nonfarm Payrolls rose by just 22,000, well below the consensus estimate of 75,000 and the prior month’s 79,000. The unemployment rate ticked up to 4.3%, its highest level since July 2024.
Productivity and Cost Trends
There were some bright spots. Q2 annualized Nonfarm Productivity exceeded expectations, suggesting improved labor efficiency, which is an encouraging sign for wage growth without fueling inflation. Additionally, quarter-over-quarter Unit Labor Costs rose only 1.0%, below the 1.2% forecast and sharply lower than the prior quarter’s 6.9%. As Unit Labor Costs are a leading indicator of inflation, markets will watch closely to see if this trend persists.
Sentiment and Survey Data
Markets also received key sentiment indicators from S&P Global and the Institute for Supply Management (ISM). S&P Global’s Manufacturing and Services Purchasing Managers’ Indices (PMIs) came in below expectations but remained above 50, signaling continued expansion, albeit at a slower pace than anticipated. ISM data painted a mixed picture: Manufacturing stayed in contraction, while Services remained in expansion. Two notable ISM subcomponents were Prices and Unemployment. Price pressures eased across both sectors, while employment sentiment weakened, reinforcing concerns about labor market softness.
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