The employment picture continued to brighten with the release of December’s numbers by the Bureau of Labor Statistics earlier this morning. The unemployment rate fell from a revised 8.7 percent in November to 8.5 percent in December. In addition, nonfarm payrolls increased by 200,000.
This exceeded expectations which had predicted a rise of around 150,000. Manufacturing employment jumped by 23,000 net new workers in December, nearly mirroring the increase found in yesterday’s ADP report.
In 2011, the U.S. economy added 1.64 million new jobs, surpassing the 940,000 net new workers created in 2010. For manufacturers there were 109,000 and 225,000 new employees generated for the sector in 2010 and 2011. The manufacturing sector has added 334,000 new jobs since December 2009.
Employment remains highly elevated, with 8.5 percent unemployment still a major challenge to growth. The so-called “real” unemployment rate – which includes discouraged and underemployed workers –is now 15.2 percent. However, this is an improvement from the 16.6 percent rate observed in December 2010.
Looking specifically at the December 2011 figures, the net increases in manufacturing employment stemmed entirely from the durable goods sector, as there was no change in nondurables for the month. Manufacturing sectors with the strongest monthly gains were transportation equipment (up 8,600), fabricated metal products (up 6,000) and machinery (up 5,300). The largest declines were found in petroleum and coal products (down 2,300), furniture and related products (down 1,400) and plastics and rubber products (down 1,400).
The average workweek edged slightly higher for manufacturers, from 40.4 hours in November to 40.5 hours in December. The average amount of overtime remained the same at 3.2 hours per week. Therefore, the average weekly earnings for manufacturing workers rose from $961.52 to $969.17.
This employment report is definitely good news and an extremely pleasant way to bring in 2012. The domestic economy – particularly among manufacturers – is starting to rebound after several weak months in mid-2011. More importantly, recent data suggest that manufacturers are upbeat about production and employment moving forward – a positive sign for the coming months.
Yet, we should also appreciate that significant weaknesses persist in the marketplace. The unemployment rate is still stubbornly high, the housing market is improving but still depressed, economic anxieties about Europe still resonate as well as the uncertainty being created in Washington. These concerns suggest that businesses remain cautiously optimistic about 2012, mindful of the headwinds that still persist around them.
Chad Moutray is chief economist, National Association of Manufacturers.