Manufacturers added just 2,000 workers on net in September, according to the Bureau of Labor Statistics. This continues a trend of disappointing jobs growth over the past year. The sector hired 38,000 additional employees in the past 12 months, or only 1.7 percent of all of the 2.2 million net new nonfarm payrolls added during that time. So far this year, manufacturing hiring has been weak since February, with 25,000 fewer workers in the sector over the past 7 months.
This trend is not expected to improve much. In the most recent NAM/IndustryWeek Survey of Manufacturers, 60 percent of respondents said that they did not plan to change their employment levels over the course of the next 12 months. With that said, the average hiring rate did increase somewhat in that survey, with average employment levels expected to grow by 1.1 percent. Still, it is clear that many business leaders remain hesitant to add new workers, at least until they perceive that the economy is on a firmer footing.
Looking specifically at manufacturing sectors in September, durable goods industries added 9,000 additional workers on net, with nondurable good firms shedding 7,000 workers. The largest gains were in fabricated metal products (up 6,300) and machinery (up 4,900). In contrast, transportation (down 2,400), printing and related support activities (down 2,100), furniture and related products (down 1,900), and paper and paper products (down 1,900) had the greatest job losses for the month. Auto sector employment was only off by 200 workers, suggesting that the transportation sector’s lower figure stemmed mostly from the aerospace industry.
Average weekly earnings were slightly higher for the month, up from $997.97 in August to $1,001.23 in September. With that said, average hours worked was mostly unchanged, with 40.8 regular hours worked and 3.4 overtime hours.
Meanwhile, nonfarm payrolls increased by 148,000 in September. This was down from the revised 193,000 additional employees created in August, and it was also below the consensus expectation of roughly 160,000. The average number of nonfarm payroll workers added each month so far in 2013 was 178,000, or just slightly under the 183,000 average for all of 2012. In essence, these job numbers suggest only a modest degree of job creation in the month of September, which is somewhat disappointing.
On the positive side, the unemployment rate declined from 7.3 percent in August to 7.2 percent in September. This indicates continued improvement in this rate, which has fallen from 7.9 percent in January. Yet, it is also true that the participation rate remains at historic lows, with the rate unchanged for the month at 63.2. The last time the participation rate was that low was August 1978.
These data show that, despite the recent uptick in activity in the U.S. economy, overall hiring remains quite sluggish. Both nonfarm payroll and manufacturing job growth continues to be disappointing. While the economy and overall job creation are expanding modestly, output and demand have been inadequate to necessitate additional hiring. We need for policymakers to consider pro-growth measures to enable manufacturers to once again be in a position to have outsized contributions to both output and employment.
Chad Moutray is the chief economist, National Association of Manufacturers.