Blue-collar industries' summer hiring drought

By the numbers: The labor market's summer hiring drought was particularly painful for industrial parts of the economy.

• The "manufacturing recession" — underway for years — got uglier. The sector lost 12,000 jobs in August, the fourth consecutive month of shrinking employment. The industry had 78,000 fewer workers last month, relative to the same period a year ago.
• Construction shed jobs for the third straight month. Wholesale trade — a sector that includes transportation, warehouse staff and material handlers — has lost 32,000 workers since May.

The big picture: A mix of Trump-era policies — including the trade war that has been steadily ramping up since April — are contributing to pressure on employers that are cranking back hiring.

On the demand side: Tariffs raise the cost of foreign-made inputs needed to assemble goods. That might crimp demand, which might force manufacturers to slash workers.

• "We've implemented our second price increase. 'Made in the USA' has become even more difficult due to tariffs on many components," an electric equipment manufacturer said in the Institute for Supply Management's monthly survey, released this week.
• "In two rounds of layoffs, we have let go of about 15 percent of our U.S. workforce," the manufacturer added.

On the supply side: Even if employers have the appetite to bring on staff, they can't hire workers who are not available. The immigration crackdown is impacting sectors that rely more heavily on those workers.

• Despite the lack of hiring, the unemployment rate in the construction sector tied the lowest on record in August, according to Ken Simonson, chief economist at the Associated General Contractors of America, a sector trade group.
• That "likely is a result of workers leaving the industry to avoid being swept up in immigration enforcement actions," Simonson said in a statement.

What they're saying: "In our view, higher tariffs and trade policy uncertainty are the main contributing factor to lower manufacturing employment," economists at Morgan Stanley wrote in a note on Friday.

• The bank notes that "goods-producing" sectors, including manufacturing and construction, have lost 67,000 jobs in the past 4 months.
• "Foreign-born workers make up a large share of employment in these sectors and lack of available workers may be a contributing factor," the economists add.

Between the lines: The hiring slowdown comes alongside more tepid wage growth for workers across America.

• Average hourly earnings for rank-and-file employees were up 3.7% in August compared to the same period a year ago — still outpacing inflation, though slowing from the roughly 4% seen in January.
• The trend is similar for manufacturing employees: wages are up 3.9%, slowing from the year's peak of 4.6% seen in March.

The other side: "Well one thing is, interest rates are too high — that is a matter of the Fed," Trump said in the Oval Office in response to a question about the manufacturing job losses.

• Kevin Hassett, Trump's top economist, added that the administration was "puzzled" about the Bureau of Labor Statistics' data.
• "All the indicators are saying that things are really strong," Hassett said, noting that the weak jobs numbers were likely to be revised up.

The bottom line: In aggregate, blue-collar industries — mining, logging, construction, manufacturing, transportation and utilities — are adding jobs at the slowest since the pandemic onset, according to calculations by economic data analyst Joey Politano.

• "Manufacturing and construction tend to be the first sectors hit when the economy slows, so the blue-collar downturn serves as a warning for the rest of the labor market unless things improve soon," Politano, who writes the Apricitas newsletter, tells Axios.