Manufacturing Employment Declines in June for the Fourth Straight Month

By July 5, 2013Economy, General

The Bureau of Labor Statistics said that nonfarm payrolls increased by 195,000 in June, higher than the consensus estimate of around 165,000. The unemployment rate was unchanged at 7.6 percent, and revisions to the April and May data added 70,000 workers. While these were decent numbers, it is clear that weaknesses remain. The number of persons employed part time for economic reasons increased by 322,000, and the so-called “real” unemployment rate, which includes those marginally attached to the labor force, rose from 13.8 percent to 14.3 percent, erasing the gains in this measure since February.

As expected, manufacturing employment remains very soft, with 6,000 fewer workers in June than in May. This was the fourth straight month of declining manufacturing employment, continuing hiring weaknesses in the sector that we have seen since mid-2012. Over the course of the past 12 months, the sector has added just 29,000 net new workers, or 1.3 percent of all of the 2.3 million nonfarm jobs added during that time. Such a paltry rate of manufacturing job growth is a sign that we need pro-growth measures to boost the sector, particularly given the outsized role in output in employment that we experienced earlier in the post-recession environment.

Looking specifically at the June manufacturing numbers, there were losses of 3,000 workers in both the durable and nondurable goods sectors. The total job losses in manufacturing would have been greater if it were not for the 5,100 additional workers in the motor vehicle sector, continuing its robust growth. Nonetheless, the largest declines were in electrical equipment and appliances (down 3,300), primary metals (down 2,800), wood products (down 1,700), and nonmetallic mineral products (down 1,500).

While the overall number of workers in the manufacturing sector fell on net, the average weekly hours edged slightly higher from 40.8 hours to 40.9 hours, and the average number of overtime hours stayed constant at 3.3 hours.

In conclusion, job growth in the larger economy appears to be moving in the right direction, even as the unemployment rate remains elevated and there are still persistent challenges. The monthly average for nonfarm payroll gains in the first six months of 2013 was 201,833, which is faster than the 182,500 average for all of 2012. Yet, the manufacturing sector’s weaknesses are notable, as mentioned above. Weaker global growth and slower domestic demand have combined to slow the need for additional hiring – something that needs to be turned around for the sector to once again flourish.

Chad Moutray is the chief economist, National Association of Manufacturers.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM), where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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