Perc Pineda, PhD, Chief Economist, PLASTICS
September 9, 2025
The August jobs report from the U.S. Bureau of Labor Statistics disappointed many, with nonfarm payroll employment increasing by only 22,000. The private sector added 38,000 jobs, while the government sector shed 16,000. Employment figures for June and July were revised to reflect a decrease of 13,000, and an increase of 79,000, respectively. The unemployment rate ticked up to 4.3%, rising from 4.2% last month and year-over-year.
These statistics raise concerns about a potentially weakening U.S. labor market. However, the report also highlights some positives. For one, the civilian labor force grew by 436,000 month-over-month and by approximately 2.28 million compared to a year earlier. Additionally, the number of employed individuals increased by 288,000 from July and by 1.97 million from August of last year.
The goods-producing sector saw a decline of 25,000 jobs, with manufacturing jobs down by 12,000. Within that, durable goods manufacturing lost 19,000 jobs, while nondurable goods manufacturing added 7,000—of which 4,300 were in plastics and rubber products. Meanwhile, the services sector contributed a gain of 63,000 jobs.
A deeper look at manufacturing employment
Although total manufacturing employment declined by 12,000 in August, the manufacturing unemployment rate ticked down to 3.8% from 4.2% in July. Despite this monthly improvement, however, the rate has been trending upward since January. As of July 2025, the Bureau of Labor Statistics estimated 437,000 job openings in manufacturing—a continued positive sign for the sector.
In plastics and rubber products manufacturing, the unemployment rate dropped to 2.4% in August. This marks the third consecutive monthly decline, falling from 5.7% in May to 4.9% in June and 4.3% in July. The earlier view that the 8.2% unemployment rate in January was transitory appears to be holding.
Plastics and rubber products manufacturing employment outlook
Whether the unemployment rate in plastics and rubber products manufacturing will remain low depends on how demand evolves in the coming months. So far, production in this sector has declined for four consecutive months through July. However, shipments increased by 0.4% in June and 0.8% in July. Year-over-year, plastics and rubber production fell by 3.0%, while shipments rose by 0.6%.
The inventory-to-shipment ratio declined steadily from February through June, typically signaling stronger demand as shipments outpaced inventory levels. If this trend continues, lower inventories could prompt increased production and, in turn, higher labor demand. However, there was a slight uptick in July.
Did tariffs and trade policy play a role in recent job reports?
The lackluster job growth in the U.S. in the last three months raises concerns about whether the shift in U.S. tariffs and trade policy played a role. An argument can also be made that when an economy is close to or at full employment, job growth could slow.
While economy theory suggests that trade barriers—such as tariffs, quotas, and import restrictions—reduce economic efficiency and can negatively impact employment in the long run, particularly in industries that rely on imported inputs or are export-oriented , the effect of the shifts in tariffs and trade policy on the U.S. plastics industry has not been empirically tested. In a U.S. International Trade Commission Working Paper, Barbe and Riker (2017) showed that in a simulation model, tariffs can increase domestic employment in sectors that sell final goods domestically, due to reduced import competition.[1] Additionally, the Budget Lab at Yale report that industrial output in tariff-sensitive industries rose by 3.5% year-to-date, returning to early 2024 levels. While tariff-sensitive employment has grown, it did so slightly below pre-2025 trend expectations, suggesting modest short-run gains but not a dramatic surge.[2] In a forthcoming White Paper, the Economics and Industry Research team at PLASTICS will be exploring whether an optimal tariff rate for the U.S. plastics industry can be estimated.
[1] Barbe, Andre, and David Riker. The Effects of Tariffs on Employment in Global Value Chains. U.S. International Trade Commission, Office of Economics Working Paper 2017-07-A, July 2017. Available at USITC Working Paper Archive.
[2] The Budget Lab at Yale. Short-Run Effects of 2025 Tariffs So Far. September 2, 2025. Available at The Budget Lab’s official research page.
