The U.S. economy added 163,000 net new jobs in July, its fastest pace since February, according to the Bureau of Labor Statistics. Even with slightly stronger nonfarm payroll growth than expected, job growth remains weak overall, with the unemployment rate edging higher from 8.2 percent in June to 8.3 percent in July.
Manufacturers continue to play an outsized role in employment and output growth, adding 25,000 net new workers in July. Over the course of the last eight months (since November), the sector has contributed 210,000 net new jobs, or 16.4 percent of the total. The stronger growth in jobs in July stands in contrast to weaker data for the industry elsewhere. Some of this could be the result of seasonal adjustments, as the data that were not adjusted reflected a smaller increase of just 10,000 workers.
The gain of 25,000 for July was primarily the result of higher employment in the durable goods sector, which added 24,000 new workers. Over half of that stemmed from the automotive sector, which was up by 12,800 employees. Other sectors that did well included transportation equipment (up 7,700 without motor vehicles), fabricated metal products (up 5,200), plastics and rubber products (up 1,600), primary metals (up 1,400), chemicals (up 1,100), and food manufacturing (up 1,100). Lower employment was observed in the machinery (down 2,200), paper and paper products (down 1,800), and printing (down 1,400) sectors.
The average workweek for manufacturers was unchanged at 40.7 hours, with the average amount of overtime steady at 3.2 hours. Nondurable good overtime was slightly less, down from 3.3 hours on average to 3.2 hours. This was reflected in earnings, as well. The average weekly earnings for manufacturing workers rose from $975.58 to $976.39.
In short, these numbers show that manufacturing continues to help drive economic growth, with strong production in durable goods industries lifting employment. Yet, it is also clear that more needs to be done for stronger growth moving forward. Manufacturers continue to worry about the future direction of the economy, and other data points to a sector which is stuck in neutral. The larger economy is also weak, with the unemployment rate too high and growth not strong enough to bring it down in any substantive way.
Manufacturers worry that policymakers will fail to act on policies to sustain growth moving into 2013. The fiscal cliff, including steep budget cuts resulting from sequestration, threatens to send the economy into a recession early next year, and slowing global growth zaps manufacturers’ ability to increase exports.
Therefore, even with today’s higher-than-expected readings on July employment, a number of headwinds exist which keep the economy from growing more than it is.
Also, this morning I appeared on C-SPAN’s Washington Journal to discuss the jobs report. You can click here to watch. And NAM President and CEO Jay Timmons released a press statement on the report here.
Chad Moutray is chief economist, National Association of Manufacturers.